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Annual report of the North Carolina Utilities Commission to the Governor of North Carolina, the Environmental Review Commission and the Joint Legislative Utility Review Committee, regarding renewable energy and energy efficiency portfolio standard in North Carolina

Annual report of the North Carolina Utilities Commission to the Governor of North Carolina, the Environmental Review Commission and the Joint Legislative Utility Review Committee, regarding renewable energy and energy efficiency portfolio standard in North Carolina

ANNUAL REPORT REGARDING
RENEWABLE ENERGY AND ENERGY EFFICIENCY
PORTFOLIO STANDARD IN NORTH CAROLINA
REQUIRED PURSUANT TO G.S. 62-133.8(j)
DATE DUE: OCTOBER 1, 2016
SUBMITTED: OCTOBER 1, 2016
RECEIVED BY
THE GOVERNOR OF NORTH CAROLINA
THE ENVIRONMENTAL REVIEW COMMISSION
AND THE JOINT LEGISLATIVE
COMMISSION ON GOVERNMENTAL OPERATIONS
SUBMITTED BY
THE NORTH CAROLINA UTILITIES COMMISSION
i
TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................... 1
BACKGROUND .................................................................................................. 17
2016 LEGISLATION ........................................................................................... 18
COMMISSION IMPLEMENTATION ................................................................... 18
North Carolina Renewable Energy Tracking System (NC-RETS) .............. 33
Environmental Impacts ............................................................................... 34
ELECTRIC POWER SUPPLIER COMPLIANCE ................................................ 35
Monitoring of Compliance with REPS Requirement ................................... 35
Cost Recovery Rider .................................................................................. 36
Electric Public Utilities ................................................................................ 37
EMCs and Municipally-Owned Electric Utilities .......................................... 46
RECOMMENDATION ......................................................................................... 58
CONCLUSIONS ................................................................................................. 59
ii
APPENDICES
1. Environmental Review
- Letter from Chairman Edward S. Finley, Jr., North Carolina
Utilities Commission, to Secretary Donald R. van der Vaart, North
Carolina Department of Environmental Quality (June 8, 2016)
- Letter from Secretary Donald R. van der Vaart, North Carolina
Department of Environmental Quality, to Chairman Edward
S. Finley, Jr., North Carolina Utilities Commission
(September 15, 2016)
2. Rulemaking Proceeding to Implement Session Law 2007-397
- Order Modifying the Swine and Poultry Waste Set-Aside
Requirements and Providing Other Relief, Docket No. E-100, Sub 113
(December 1, 2015)
- Order Establishing 2015 Poultry Waste Set-Aside Requirement
Allocation, Docket No. E-100, Sub 113 (December 15, 2015)
- Order Establishing Method of Allocating the Aggregate Poultry Waste
Resource Set-Aside Requirement, Docket No. E-100, Sub 113
(April 18, 2016)
- Order on NCSEA’s Request, Docket No. E-100, Sub 113
(June 6, 2016)
- Order Establishing the 2016, 2017, and 2018 Poultry Waste Set-Aside
Requirement Allocation, Docket No. E-100, Sub 113 (August 5, 2016)
3. Renewable Energy Facility Registrations
- Order Revoking Registration of Renewable Energy Facilities and
New Renewable Energy Facilities, Docket No. E-100, Sub 130
(December 2, 2015)
- Order Accepting Registration of New Renewable Energy Facilities,
Docket No. E-7, Subs 1086 and 1087 (March 11, 2016)
- Order Giving Notice of Intent to Revoke Registration of Renewable
Energy Facilities and New Renewable Energy Facilities,
Docket No. E-100, Sub 130 (August 25, 2016)
1
EXECUTIVE SUMMARY
In August 2007, North Carolina enacted comprehensive energy legislation,
Session Law 2007-397 (Senate Bill 3), which, among other things, established a
Renewable Energy and Energy Efficiency Portfolio Standard (REPS), the first
renewable energy portfolio standard in the Southeast. Under the REPS, all electric
power suppliers in North Carolina must meet an increasing amount of their retail
customers’ energy needs by a combination of renewable energy resources (such
as solar, wind, hydropower, geothermal and biomass) and reduced energy
consumption. Pursuant to G.S. 62-133.8(j), the Commission is required to report
by October 1 of each year to the Governor, the Environmental Review
Commission, and the Joint Legislative Commission on Governmental Operations
on the activities taken by the Commission to implement, and by electric power
suppliers to comply with, the REPS requirement.
2016 Legislation
The 2015-2016 General Assembly did not pass any legislation amending
the REPS.
Commission Implementation
Rulemaking Proceeding
Immediately after Senate Bill 3 was signed into law, the Commission
initiated a proceeding in Docket No. E-100, Sub 113, to adopt rules to implement
the REPS and other provisions of the new law. On February 29, 2008, the
Commission issued an Order adopting final rules implementing Senate Bill 3.
Since issuing this Order, the Commission has issued a number of orders
interpreting various REPS provisions, including the following Orders issued since
the 2015 report to the General Assembly:
 On December 1, 2015, in Docket No. E-100, Sub 113, the
Commission issued an Order Modifying the Swine and Poultry
Waste Set-Aside Requirements and Providing Other Relief. The
Order concluded that the electric suppliers made a
reasonable effort to comply with the REPS swine and poultry
waste set-aside requirements in 2015, but would not be able
to comply. The Order resulted in the following updated
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compliance schedules for the swine waste and poultry waste
set-asides REPS requirements:
Calendar Year Requirement for Swine Waste Resources
2016-2017 0.07%
2018-2020 0.14%
2021 and thereafter 0.20%
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 MWh
2015 170,000 MWh
2016 700,000 MWh
2021 and thereafter 900,000 MWh
On August 11, 2016, in Docket No. E-100, Sub 113, electric
power suppliers filed a motion to delay the requirements of the
2016 swine waste set-aside and to modify the requirements
of the poultry waste set-aside. On August 31, 2016, the
Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
 On December 15, 2015, in Docket No. E-100, Sub 113, the
Commission issued an Order Establishing 2015 Poultry
Waste Set-Aside Requirement Allocation. The Order
established that the 2014 retail sales data reported to
NC-RETS by electric power suppliers and utility compliance
aggregators shall be used to allocate, on a pro-rata basis, the
170,000 MWh aggregate poultry waste set-aside requirement
for 2015.
 On April 18, 2016, in Docket No. E-100, Sub 113, the
Commission issued an Order Establishing Method of
Allocating the Aggregate Poultry Waste Resource Set-Aside
Requirement. The Order established that, starting with the
2016 compliance year, the aggregate poultry waste set-aside
obligation shall be allocated among the electric power
suppliers by averaging three years of historic retail sales
(2013, 2014, and 2015), with the resulting allocation held
constant for three years (2016, 2017, and 2018).
 On June 6, 2016, in Docket No. E-100, Sub 113, the
Commission issued an Order on NCSEA’s Request,
concluding that a topping cycle combined heat and power
system does not constitute an energy efficiency measure
under G.S. 62-133.8(a)(4), except to the extent that the
secondary component, the waste heat component, is used.
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 On August 5, 2016, in Docket No. E-100, Sub 113, the
Commission Issued an Order Establishing the 2016, 2017,
and 2018 Poultry Waste Set-Aside Requirement Allocation.
The Order established that the aggregate poultry waste set-aside
requirement for 2016, 2017, and 2018 shall be allocated
among the electric power suppliers and utility compliance
aggregators based on the load ratio share calculations shown
in the spreadsheet filed by the NC-RETS Administrator in
Docket No. E-100, Sub 113 on July 11, 2016 and the
methodology previously adopted by the Commission.
Renewable energy facilities
Senate Bill 3 defines certain electric generating facilities as “renewable energy
facilities” or “new renewable energy facilities.” Renewable energy certificates (RECs)
associated with electric or thermal power generated at such facilities may be used by
electric power suppliers to comply with the REPS requirement as provided in
G.S. 62-133.8(b) and (c).
In its rulemaking proceeding, the Commission adopted rules providing for
certification or report of proposed construction and registration of renewable
energy facilities and new renewable energy facilities. As of September 1, 2016, the
Commission has accepted registration statements filed by 1419 facilities. A list of
these facilities, along with other information, may be found on the Commission’s
website at: http://www.ncuc.net/reps/reps.htm.
Since the 2015 report, the Commission has issued a number of orders
addressing issues related to the registrations of a renewable energy facility or new
renewable energy facility, including the following:
 On December 2, 2015, the Commission issued an Order
revoking the registrations of 127 facilities registered with the
Commission as renewable energy facilities or as new
renewable energy facilities. The owners of the 127 facilities
did not complete their annual certifications on or before
October 15, 2015, as required by the Commission’s August
12, 2015 Order giving notice of intent to revoke registrations,
nor had an annual certification been completed for these
facilities as of the date of the Order. The Order states that
should the owner of a facility whose registration has been
revoked wish to have the energy output from its facility
become eligible for compliance with the REPS, the owner
must again register the facility with the Commission.
 On March 11, 2016, in Docket No. E-7, Subs 1086 and 1087,
the Commission issued an Order Accepting Registration of
New Renewable Energy Facilities accepting the registration
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of Duke Energy Carolina’s Buck and Dan River combined-cycle
generating facilities as new renewable energy facilities.
The facilities will be combusting directed biogas to generate
electricity for Duke Energy Carolina’s customers. The biogas
will be produced by anaerobic digestion of swine waste and
other biomass at facilities located in Missouri and Oklahoma,
cleaned to pipeline quality, metered, injected into the
interstate pipeline, and nominated for use by Duke Energy
Carolinas at Buck and Dan River. In previous orders, the
Commission concluded that biogas derived from the
anaerobic digestion of animal waste is a renewable energy
resource and that when such biogas is produced outside of
North Carolina, injected into the natural gas pipeline, and
nominated for use by a natural gas-fueled electric generating
facility, it is a renewable energy resource and the resulting
electric generation would be eligible to earn RECs that may
be used for REPS compliance, so long as appropriate
attestations are made and records kept to ensure that no
biogas is double-counted. Consistent with these past orders,
the Commission concluded that the registration statements for
the Buck and Dan River combined-cycle generating facilities
should be accepted. Further, the RECs associated with the
renewable energy generated at Buck and Dan River from
directed biogas will not be deemed out-of-State RECs subject
to the 25% limitation on the use for REPS compliance of
unbundled out-of-State RECs.
 On August 25, 2016, in Docket No. E-100, Sub 130, the
Commission issued an Order giving notice of its intent to
revoke the registrations of 26 renewable energy facilities and
215 new renewable energy facilities because their owners
had not completed or filed the annual certifications required
each April 1, as detailed in Commission Rule R8-66(b).
Facility owners were given until October 1, 2016, to file their
annual certifications belatedly. Owners that do not complete
the annual certifications face their facility’s registrations being
revoked pursuant to Commission Rule R8-66(f). The matter is
pending before the Commission.
North Carolina Renewable Energy Tracking System (NC-RETS)
Pursuant to G.S. 62-133.8(k), enacted in 2009, the Commission was
required to develop, implement, and maintain an online REC tracking system no
later than July 1, 2010, in order to verify the compliance of electric power suppliers
with the REPS requirements.
5
On February 2, 2010, after evaluating the bids received in response to a
request for proposals (RFP), the Commission signed a Memorandum of
Agreement (MOA) with APX, Inc. (APX), to develop and administer an online REC
tracking system for North Carolina, NC-RETS. APX successfully launched
NC-RETS on July 1, 2010, and by letter dated September 3, 2010, the
Commission accepted the system and authorized APX to begin billing users
pursuant to the MOA. The original MOA with APX expired on December 31, 2013.
Based on the feedback received from the stakeholders, the Commission extended
the MOA with APX through December 31, 2017.
RECs have been successfully created by, and imported into, NC-RETS, and
the electric power suppliers have used the system to demonstrate compliance with
the 2010-2015 REPS solar set-aside requirements, the 2015 poultry waste set-aside
requirement, and the 2012-2015 REPS general requirements. Lastly, the
Commission has established an on-going NC-RETS stakeholder group, providing
a forum for resolution of issues and discussion of system improvements.
Environmental impacts
Pursuant to G.S. 62-133.8(j), the Commission was directed to consult with
the North Carolina Department of Environmental Quality (DEQ) in preparing its
report and to include any public comments received regarding direct, secondary,
and cumulative environmental impacts of the implementation of the REPS
requirements of Senate Bill 3. The Commission has not identified, nor has it
received from the public or DEQ, any public comments regarding direct,
secondary, and cumulative environmental impacts of the implementation of the
REPS provision of Senate Bill 3. DEQ, in response to the Commission’s request,
notes impacts on North Carolina’s air, water and land quality. DEQ’s full response
is attached to this report as part of Appendix 1.
Electric Power Supplier Compliance
The REPS requires electric power suppliers, beginning in 2012, to meet an
increasing percentage of their retail customers’ energy needs by a combination of
renewable energy resources and energy reductions from the implementation of
energy efficiency (EE) and demand-side management (DSM) measures. In
addition, as of 2010, each electric power supplier must meet a certain percentage
of its retail electric sales with solar RECs from certain solar facilities. Finally,
starting in 2012, each electric power supplier must meet a certain percentage of
its retail electric sales from swine waste resources and a specified amount of
electricity provided must be derived from poultry waste resources.
Monitoring compliance with REPS requirements
Monitoring by the Commission of compliance with the REPS requirements
of Senate Bill 3 is accomplished through the annual filing by each electric power
supplier of a REPS compliance plan and a REPS compliance report. Pursuant to
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Commission Rule R8-67(b), on or before September 1 of each year, each electric
power supplier is required to file with the Commission a REPS compliance plan
providing specific information regarding its plan for complying with the REPS
requirement of Senate Bill 3. Pursuant to Commission Rule R8-67(c), each electric
power supplier is required to annually file with the Commission a REPS compliance
report. The REPS compliance plan is a forward-looking forecast of an electric
power supplier’s REPS requirement and its plan for meeting that requirement. The
REPS compliance report is an annual look back at the RECs earned or purchased
and energy savings actually realized during the prior calendar year, and the electric
power supplier’s compliance in meeting its REPS requirement.
Cost recovery rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider up to an annual cap to recover the incremental costs incurred to
comply with the REPS requirement and to fund certain research. Commission
Rule R8-67(e) establishes a procedure under which the Commission will consider
approval of a REPS rider for each electric public utility. The REPS rider operates
in a manner similar to that employed in connection with the fuel charge adjustment
rider authorized in G.S. 62-133.2 and is subject to an annual true-up.
Electric public utilities
Duke Energy Progress, LLC (DEP)
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2016: $1.31 per month for residential
customers; $10.78 per month for general service/lighting customers; and
$83.33 per month for industrial customers. DEP’s proposed rates for residential
customers and for general service/lighting customers are both below the
incremental per-account cost cap established in G.S. 62-133.8(h). However,
DEP’s proposed rate for industrial customers, on an annual basis is $999.96 per
customer account, as compared to the annual cost cap of $1,000.00 per customer
account. In its report, DEP indicates that it acquired sufficient RECs to meet the
2015 requirement of 6% of its 2014 retail sales. Additionally, DEP indicates that it
acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its 2014
retail sales. DEP also indicates that it was able to meet the revised poultry waste
set-aside requirement in 2015. Pursuant to the Commission’s December 1, 2015
Order in Docket No. E-100, Sub 113, DEP’s 2015 swine waste set-aside
requirement was delayed until 2016. A hearing was held on DEP’s 2015 REPS
compliance report and 2016 REPS cost recovery rider on September 20, 2016. A
final decision is pending before the Commission.
7
On September 1 2016, in Docket No. E-100, Sub 147, DEP filed its
2016 REPS compliance plan as part of its 2016 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) purchases
of RECs; (2) operations of company-owned renewable facilities; (3) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; and (4) research studies to enhance its ability to comply
in future years. DEP states that it intends to fully satisfy and vastly exceed the
minimum solar set-aside requirements of 0.14% of the prior year’s retail sales in
2016 and 2017 and 0.20% of prior year’s retail sales in 2018 through purchase
power agreements, company-owned solar PV facilities, and REC purchases. DEP
identifies three primary methods for compliance with the swine waste set-aside
requirement and states that despite its active and diligent efforts, it will be unable
to comply with the requirement in 2016 and is highly uncertain of its ability to
comply in 2017 and 2018 due to multiple variables, particularly related to
counterparty achievement of projected delivery requirements and commercial
operation milestones. As to compliance with the poultry waste set-aside
requirements, DEP states that it continues to pursue various efforts to meet its
compliance requirement. DEP states that, in spite of these efforts, it has been
unable to secure enough RECs to comply with its share of the 2016 aggregate
poultry waste set-aside requirement and that its ability to achieve compliance with
the requirements in 2017 and 2018 remains uncertain and largely subject to
counterparty performance. DEP notes several resource options available to the
Company to meet its general requirement. DEP states it views the downward trend
in solar equipment and installation costs as a positive trend and that it expects
solar resources to contribute to compliance efforts beyond the solar set-aside
minimum threshold. Approval of DEP’s 2016 compliance plan is pending before
the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, along with several
other parties, filed a motion to delay the requirements of the 2016 swine waste set-aside
and to modify the requirements of the poultry waste set-aside. On August
31, 2016, the Commission issued an Order Requesting Comments on the motion.
The matter is pending before the Commission.
Duke Energy Carolinas, LLC (DEC)
On March 9, 2016, in Docket No. E-7, Sub 1106, as corrected by a filing on
March 15, 2016, DEC filed its 2015 REPS compliance report and an application
for approval of a REPS rider to be effective September 1, 2016. The application
requested a total REPS rider of $0.95 per month for residential customers; $4.38
per month for general customers (the DEC equivalent of commercial class
customers); and $22.27 per month for industrial customers–each of which is below
the incremental per-account cost cap established in G.S. 62-133.8(h). In its 2015
REPS compliance report, DEC indicates that it acquired sufficient RECs to meet
the 2015 requirement of 6% of its 2014 retail sales. Additionally, DEC indicates
that it acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its
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2014 retail sales and had acquired its pro-rata share of poultry RECs to satisfy the
2015 poultry waste set-aside requirement. Pursuant to the Commission’s
December 1, 2015 Order in Docket No. E-100, Sub 113, DEC’s 2015 swine waste
set-aside requirement was delayed until 2016. On March 9, 2016, the Commission
held a hearing on DEC’s 2015 compliance report and REPS cost recovery rider.
On August 16, 2016, the Commission issued an order approving DEC’s proposed
REPS riders. In the same Order, the Commission approved DEC’s 2015
compliance report and retired the RECs in DEC’s 2015 compliance sub account.
Additionally, in the same Order, the Commission notes several specific concerns
regarding DEC’s charging of interconnection costs to the REPS rider and required
DEC to address these concerns in future proceedings.
On September 1, 2016, in Docket No. E-100, Sub 147, DEC filed its 2016
REPS compliance plan as part of its 2016 IRP update report. In its plan, DEC
indicates that its overall compliance strategy to meet the REPS requirements
consisted of the following key components: (1) purchases of RECs; (2) operations
of company-owned renewable facilities; (3) energy efficiency programs that will
generate savings that can be counted towards obligation requirements; and
(4) research studies to enhance its ability to comply in future years. DEC intends
to achieve compliance with the solar set-aside requirement of 0.14% of the prior
year’s retail sales in 2016 and 2017 and 0.20% of prior year’s sales in 2018 through
a combination of power purchase agreements and company owned solar PV
facilities. DEC identifies three primary methods for compliance with the swine
waste set-aside requirement, but states that despite its efforts it will be unable to
comply with the requirement in 2016 and is highly uncertain of its ability to comply
in 2017 and 2018 due to multiple variables, particularly related to counterparty
achievement of projected delivery requirements and commercial operation
milestones. As for compliance with the poultry waste set-aside requirements, DEC
states in its compliance plan that it continues to pursue various efforts to meet its
compliance requirement, but in spite of these efforts, it has been unable to secure
enough RECs to comply with its share of the 2016 aggregate poultry waste set-aside
requirement and that its ability to achieve compliance with the requirements
in 2017 and 2018 remains uncertain and largely subject to counterparty
performance. DEC notes encouraging developments in its prospects for
compliance with the poultry waste set-aside requirements in a growing use of
thermal poultry RECs and DEC having recently signed a contract to purchase
poultry waste-derived directed biogas from a project in North Carolina that will be
used for fuel in DEC’s Dan River or Buck combined-cycle plants. DEC notes
several resource options available to the Company to meet its general
requirement, including meeting 25% (the maximum allowable under the REPS) of
its requirement through its energy efficiency programs, hydroelectric power
procured from suppliers and from its wholesale customers SEPA allocations, and
through a variety of biomass, wind and solar resources. DEC plans to meet a
portion of the general requirement with RECs from solar facilities above that
portion required by the solar set-aside. DEC states it views the downward trend in
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solar equipment and installation costs as a positive trend. Approval of DEC’s
2016 Compliance Plan is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEC, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. On
August 31, 2016, the Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
Dominion North Carolina Power (Dominion)
On August 19, 2015, in Docket No. E-22, Sub 525, Dominion filed an
application for approval of a 2015 REPS recovery rider and its 2015 compliance
report (for the 2014 compliance year). The report included compliance status for
the Town of Windsor. Dominion states that it met its 2014 general REPS
requirement by purchasing unbundled out-of-state solar and wind RECs, in-state
solar RECs, and through energy efficiency measures and met the Town of
Windsor’s requirement with additional biomass RECs from within the State as well
as the appropriate SEPA allocations. Dominion states that it met its 2014 solar set-aside
requirement and the Town of Windsor’s requirement by purchasing solar
RECs. Dominion states that its 2014 swine waste set-aside requirement in
G.S. 62-133.8(e) and (f) for itself and the Town of Windsor was relieved pursuant
to the Commission’s November 13, 2014 Order in Docket No. E-100, Sub 113.
Dominion further states that it met its 2015 poultry waste set-aside requirement in
G.S. 62-133.8(f), for both itself and the Town of Windsor and anticipates fulfillment
of the 2015 requirement for itself and the Town of Windsor. On December 16,
2015, the Commission issued an Order Approving REPS and REPS EMF Riders
and 2014 REPS Compliance. The Order approved the following total 2014 REPS
riders: $0.23 per month for residential customers; $0.99 per month for commercial
customers; and $6.70 per month for industrial customers. In addition, the Order
approved Dominion’s 2015 REPS compliance report and retired the RECs and
EECs associated with that account.
On April 29, 2016, in Docket No. E-100, Sub 147, Dominion filed its 2016
REPS compliance plan as part of its 2016 IRP update report. Dominion states that
it intends to meet its general REPS requirements in 2016 through 2018 through
the use of RECs, EE, and new company-generated renewable energy where
economically feasible. Dominion also detailed its efforts to comply with the REPS
set-aside requirements. Through those efforts, Dominion states that it currently
has, or has contracts to purchase, sufficient RECs to satisfy the solar, swine waste,
and poultry waste set-aside requirements. However, Dominion notes that there is
some uncertainty around swine waste compliance due to the fact that its single
supply source is under construction and has not yet reached commercial
operation. The matter is pending before the Commission.
10
On August 11, 2016, in Docket No. E-100, Sub 113, Dominion, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. On
August 31, 2016, the Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
EMCs and municipally-owned electric utilities
There are thirty-one EMCs serving customers in North Carolina, including
twenty-six that are headquartered in the state. Twenty-five of the EMCs are
members of North Carolina EMC (NCEMC), a generation and transmission (G&T)
services cooperative that provides wholesale power and other services to its
members. In addition, there are seventy-four municipal and university-owned
electric distribution systems serving customers in North Carolina. Fifty-one of the
North Carolina municipalities are participants in either North Carolina Eastern
Municipal Power Agency (NCEMPA), or North Carolina Municipal Power Agency
Number 1 (NCMPA1), municipal power agencies that provide wholesale power to
their members. The remaining municipally-owned electric utilities purchase their
electric power from wholesale electric suppliers.
By Orders issued August 27, 2008, the Commission allowed twenty-two
EMCs to file their REPS compliance plans on an aggregated basis through
GreenCo Solutions, Inc., and the fifty-one municipal members of the power
agencies to file through NCEMPA and NCMPA1.
GreenCo Solutions, Inc. (GreenCo)
On September 1, 2016, in Docket No. E-100, Sub 149, GreenCo filed with
the Commission its 2015 REPS compliance report and its 2016 compliance plan.
In its plan, GreenCo states that it intends to use its members’ allocations from SEPA,
RECs purchased from both in-state and out-of-state renewable energy facilities, and
EE savings from eleven approved EE programs to meet its members’ REPS
requirements. GreenCo states that it has joined other electric power suppliers to
request a delay to the 2016 poultry and swine waste set-aside requirements, noting
that the prospect of complying in 2017 is more likely than 2016. In its 2015 REPS
compliance report, GreenCo states that, in 2015, its member cooperatives as well
as Broad River and Mecklenburg EMCs fully met the general REPS requirement.
GreenCo states it secured adequate resources to meet its members’ solar set-aside
requirement for 2015 (18,177 RECs for GreenCo, 3 RECs for Mecklenburg, and
9 RECs for Broad River) and to meet its members’ poultry waste set-aside
requirement for 2015 (16,577 RECs for GreenCo, 3 RECs for Mecklenburg, and
8 RECs for Broad River). GreenCo also states that it secured adequate resources
to meet its members’ general REPS requirement for 2015 (779,006 RECs for
GreenCo, 105 RECs for Mecklenburg, and 353 RECs for Broad River). GreenCo
notes that the Commission delayed its swine waste set-aside requirements until
2016. Lastly, for 2015, the REPS incremental costs incurred by GreenCo’s members
were less (around one-tenth) of the costs allowed under the per-account cost cap in
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G.S. 62-133.8(h). Approval of GreenCo’s 2016 compliance plan and 2015
compliance report is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, GreenCo, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
EnergyUnited Electric Membership Corporation (EnergyUnited)
On August 31, 2016, in Docket No. E-100, Sub 149, EnergyUnited filed its
2015 REPS compliance report with the Commission and on September 6, 2016 in
the same docket, EnergyUnited filed its compliance plan. In its report,
EnergyUnited states that it met its 2015 general REPS requirement, its solar set-aside
requirement, and its poultry waste set-aside requirement. In its plan,
EnergyUnited states that it intends to comply with its future obligations through its
SEPA allocations, EE programs, and the purchase of RECs and renewable
energy. On August 11, 2016, in Docket No. E-100, Sub 113, EnergyUnited, along
with several other parties, filed a motion to delay the requirements of the 2016
swine waste set-aside and to modify the requirements of poultry waste set-aside.
The Commission has requested comments on the matter and it is pending before
the Commission.
Tennessee Valley Authority (TVA)
On September 1, 2016, TVA filed its 2016 REPS compliance plan and 2015
REPS compliance report with the Commission. In its plan, TVA indicates its intent
to fulfill the general REPS requirement in 2016 through 2018 with its SEPA
allocations, purchase of out-of-state wind RECs, and the purchases of various
in-state RECs. With regard to its cooperatives’ solar set-aside requirements, TVA
reiterates its plans to meet the requirement by generating the energy at its own
facilities. TVA states that it is making reasonable efforts to procure potential and
available swine RECs, but it believes that there are not sufficient amounts of such
energy and RECs available to meet the 2016 swine waste set-aside requirements.
TVA states that it is making reasonable efforts to procure energy and RECs from
available poultry waste resources, including generating electricity at its own facility
and other permitted resources, to meet the REPS poultry waste set-aside
requirements. In its report, TVA states it had satisfied its cooperatives’ 2015
general REPS requirement with its SEPA allocations, purchase of out-of-state wind
RECs, and the purchases of various in-state RECs and had satisfied its
cooperatives’ 2015 solar set-aside requirement through the generation of solar
energy. TVA notes that it was relieved of its 2015 swine waste set-aside
requirements and fulfilled its 2015 poultry waste set-aside requirement. TVA states
that it had no incremental costs of compliance (TVA’s estimated cost cap is
$1,763,934). On August 11, 2016, in Docket No. E-100, Sub 113, TVA, along with
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several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Halifax Electric Membership Corporation (Halifax)
On September 1, 2016 in Docket No. E-100, Sub 147, Halifax filed with the
Commission its 2016 compliance plan and 2015 compliance report. In its
compliance plan, Halifax states that it intends to meet its REPS requirements with
a combination of SEPA allocations, EE programs, various RECs, and additional
resources to be determined on an ongoing basis. Halifax notes concerns regarding
the addition of industrial customers and its cost cap in future years. With regard to
its 2014 solar set-aside requirement, Halifax met the requirement by generating
solar energy and purchasing solar RECs. With regard to its 2014 poultry waste
set-aside requirement, Halifax met the requirement by purchasing poultry RECs.
Halifax’s (and the other electric power suppliers’) swine waste set-aside
requirement was delayed until 2016 pursuant to the Commission’s December 1,
2015 Order in Docket No. E-100, Sub 113. On August 11, 2016, in Docket
No. E-100, Sub 113, Halifax, along with several other parties, filed a motion to
delay the requirements of the 2016 swine waste set-aside and to modify the
requirements of poultry waste set-aside. The Commission has requested
comments on the matter and it is pending before the Commission.
North Carolina Eastern Municipal Power Agency (NCEMPA)
On September 1, 2016, in Docket No. E-100, Sub 149, NCEMPA filed with
the Commission, on behalf of its members, its 2016 REPS compliance plan and
2015 REPS compliance report. In its 2016 compliance plan, NCEMPA states that
its members have no plans to generate electric power at a renewable energy
facility. NCEMPA states that its members would meet their REPS requirements by
purchasing RECs and SEPA allocations. NCEMPA states that it will continue to
implement its current EE programs, but it will no longer use EE as a method of
REPS compliance, citing the costs of M&V, the low number of RECs actually
produced, and the availability of other REPS compliance methods. NCEMPA
states that it has entered into contracts to purchase various types of RECs and will
continue to investigate the market for unbundled RECs as a cost-effective means
of REPS compliance. NCEMPA further states that it has entered into contracts for
enough RECs to satisfy the solar set-aside requirement through 2018. NCEMPA
has also entered into agreements to secure NCEMPA’s pro rata share of the
statewide aggregate of the poultry waste set-aside requirement through 2017, but
has joined the joint motion to delay the requirement because the aggregate goal
will not be met. NCEMPA cites a number of challenges in securing swine waste
RECs and states that it is not in a position to meet the 2016 swine waste
requirements. In its compliance report, NCEMPA states that it met its 2015 general
REPS requirement (427,085 RECs) through the purchase of bundled renewable
energy from hydro generation sources and the purchase of solar, biomass, and
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poultry RECs. Additionally, NCEMPA states in its report that it met its 2015 solar
set-aside requirement (9,966 RECs) by purchasing solar RECs and its 2015
poultry waste set-aside requirement (9,089 RECs) by purchasing poultry RECs
and RECs available under S.L. 2011-279 (Senate Bill 886). NCEMPA shows in its
report that its 2015 actual incremental compliance costs were well below the
per-account cost cap and estimated in its compliance plan that the incremental
costs for REPS compliance will be significantly less than its per-account cost cap
in 2015 through 2017. Approval of NCEMPA’s 2016 REPS compliance plan and
2015 REPS compliance report is pending before the Commission. On August 11,
2016, in Docket No. E-100, Sub 113, NCEMPA, along with several other parties,
filed a motion to delay the requirements of the 2016 swine waste set-aside and to
modify the requirements of poultry waste set-aside. The Commission has
requested comments on the matter and it is pending before the Commission.
North Carolina Municipal Power Agency No. 1 (NCMPA1)
On August 31, 2016, NCMPA1 filed with the Commission, on behalf of its
members, its 2016 REPS compliance plan and 2015 REPS compliance report. In
its plan, NCMPA1 states that it intends to investigate and develop, as applicable,
new renewable energy facilities. NCMPA1 states that its members would meet
their REPS requirements by purchasing RECs, as well as utilizing SEPA
allocations. NCMPA1 states that it will continue to implement its current EE
programs, but it will no longer use EE as a method of REPS compliance, citing the
costs of M&V, the low number of RECs actually produced, and the availability of
other REPS compliance methods. NCMPA1 states that it had entered into
contracts to purchase various types of RECs and would continue to investigate the
market for unbundled RECs as a cost-effective means of REPS compliance. In its
compliance plan, NCMPA1 states that it had entered into contracts for enough
RECs to satisfy the solar set-aside requirement through 2018. In its compliance
report, NCMPA1 states that it met its 2015 general REPS requirement (297,968
RECs) by purchasing renewable energy from solar generation resources purchase
of bundled renewable energy from hydroelectric generation resources, and
through the purchase of solar, biomass, hydroelectric and poultry RECs.
Additionally, NCMPA1 states that it met its 2015 solar set-aside requirement by
purchasing electricity from solar generating facilities and through the purchase of
solar RECs, and met its 2015 poultry set-aside requirement through the purchase
of RECs. NCMPA1 states that its 2015 incremental costs were about one-sixth of
the per-account cost cap and estimated in its compliance plan that the incremental
costs for REPS compliance will be significantly less than its per-account cost cap
in 2016 through 2018. Approval of NCMPA1’s 2016 REPS compliance plan and
2015 REPS compliance report is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, NCMPA1, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
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Fayetteville Public Works Commission (FPWC)
On September 1, 2016, in Docket No. E-100, Sub 113, FPWC filed its
2015 compliance report and 2016 compliance plan. In its 2016 compliance plan,
FPWC states that it intends to meet its REPS requirements by purchasing RECs,
as well as utilizing SEPA allocations and EE and DSM programs. Finally, FPWC
states that its incremental costs for REPS compliance are projected to be less than
its per-account cost cap in 2016 through 2018. In its compliance report, FPWC
states that it met its 2015 general REPS requirement (125,268 RECs) through the
purchase of in-state and out-of-state RECs. Additionally, FPWC states that it met
its solar set-aside requirement through the purchase of 2,923 solar RECs and its
poultry waste set-aside requirement through the purchase of 2,666 poultry RECs.
Approval of FPWC’s 2015 compliance report and 2016 compliance plan is pending
before the Commission. On August 11, 2016, in Docket No. E-100, Sub 113,
FPWC, along with several other parties, filed a motion to delay the requirements
of the 2016 swine waste set-aside and to modify the requirements of poultry waste
set-aside. The Commission has requested comments on the matter and it is
pending before the Commission.
Town of Fountain (Fountain)
On August 23, 2016, in Docket No. E-100, Sub 149, Fountain filed its 2016
compliance plan and 2015 compliance report. Fountain notes in its compliance
plan that compliance for 2016 through 2018 would be satisfied through the
purchase of RECs. In its compliance report, Fountain states that its 2015 general
REPS requirement was 187 RECs. Fountain additionally notes that its solar set-aside
requirement was 5 solar RECs and its poultry waste set-aside requirement
was 18 RECs, all of which were satisfied through the purchase of RECs. Further,
Fountain notes that its incremental costs were 30% of the allowed per-account cost
cap. Approval of Fountain’s 2015 compliance report and its 2016 compliance plan
is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, Fountain, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of the 2016 poultry waste set-aside.
The Commission has requested comments on the matter and it is pending
before the Commission.
Town of Waynesville (Waynesville)
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. In its report, DEP states that it
provided REPS compliance for Waynesville for 2015 and that DEP met the REPS
requirements for its wholesale power customers, including Waynesville. On
September 12, 2016, in Docket No. E-100, Sub 149, Waynesville filed its 2016
compliance plan. In its plan, Waynesville states that, beginning in 2016,
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Waynesville will be responsible for its own REPS compliance. Waynesville further
states that the key components of its compliance plan include purchases of RECs,
SEPA RECs up to 30% of the requirement, and energy efficiency programs.
Waynesville expects to fully exceed the minimum solar set-aside requirements
during 2016-2018 compliance years but notes that meeting the swine and poultry
waste set-aside requirements during that period will be challenging. Waynesville
states that it is well positioned to meet the general REPS requirements during
2016-2018 compliance years.
Wholesale Providers Meeting REPS Requirements
DEP, as the wholesale provider, has agreed to meet the REPS
requirements for the towns of Black Creek, Lucama, Sharpsburg, Stantonsburg,
and Winterville.1 Similarly, DEC has agreed to meet the REPS requirements for
Rutherford EMC; Blue Ridge EMC; the cities of Concord and Kings Mountain; and
the towns of Dallas, Forest City, and Highlands. Dominion has agreed to meet the
REPS requirements for the Town of Windsor. The towns of Macclesfield, Pinetops,
and Walstonburg have previously filed letters stating that the City of Wilson, as
their wholesale provider, has agreed to include their loads with its own for reporting
to NCEMPA for REPS compliance. Oak City has indicated that Edgecombe-Martin
County EMC, its wholesale provider, has agreed to include its loads with its own
for reporting to GreenCo for REPS compliance.
Recommendation
On September 18, 2015, the Governor signed into law House
Bill 97/Session Law 2015-241 (2015 Budget). Section 15.16A of the 2015 Budget
directs the Utilities Commission and the Public Staff to jointly review all fees and
charges provided for in G.S. 62-300 to determine 1) whether the fees and charges
are sufficient to cover the costs of processing the applications and filings required
by G.S. 62-300 and 2) whether new categories should be established to impose
fees or charges on persons or entities who make applications or filings to the
Commission, but are not expressly included in any of the current categories of fees
and charges listed in G.S. 62-300.
On March 29, 2016, the Commission and Public Staff submitted a report
pursuant to Section 15.16A of the 2015 Budget. As discussed in detail below, the
report states that the current fees are not sufficient to cover the Commission’s
administrative costs associated with processing filings. The report includes three
recommendations, two of which are relevant to the Commission’s implementation
of the REPS:
1 On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS compliance
report and application for approval of its 2016 REPS cost recovery rider. In its report, DEP states
its contract as wholesale power provider and for providing REPS compliance services for
Waynesville expired on December 31, 2015.
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1. That the General Assembly consider adding new categories of fees
allowed under G.S. 62-300 to defray processing costs for renewable
energy registration statements, reports of proposed construction,
and CPCN applications by non-utility generators; and
2. That the General Assembly consider expanding the Commission’s
authority under G.S. 62-71(d) to allow the Commission to recover all
direct hearing costs from non-utility entities not subject to the
regulatory fee.
Legislation amending G.S. 62-300 was not enacted in 2016. The Commission
recommends that the General Assembly consider the recommendations contained in the
March 29, 2016 report pursuant to Section 15.16A of the 2015 Budget during the 2016
legislative session.
Conclusions
All of the electric power suppliers have met or appear to have met the
2012-2015 general REPS requirement and appear on track to meet the 2016
general REPS requirements. All of the electric power suppliers have met the
2012-2015 solar set-aside requirements and appear to be on track to meet the
2016 solar set-aside requirement. The Commission granted a joint motion to delay
implementation of the 2015 swine waste set-aside requirement, delaying
implementation of that section of the REPS by one additional year. In addition, the
electric power suppliers appear to have met the poultry waste set-aside
requirement in 2015. Despite this, most electric power suppliers do not appear on
track to meet the swine and poultry waste set-aside requirements for 2016 and
have requested further delays to both of these requirements. The electric power
suppliers requested a delay in the requirements of the 2016 swine waste set-aside
and a modification of the requirements of the poultry waste set-aside to keep that
requirement at the same level as the 2015 requirement. The matter is pending
before the Commission. In addition, numerous issues continue to arise in the
implementation of the REPS statute that have required interpretation by the
Commission of the statutory language. If the plain language of the statute was
ambiguous, the Commission attempted to discern the intent of the General
Assembly in reaching its decision on the proper interpretation of the statute.
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BACKGROUND
In August 2007, North Carolina enacted comprehensive energy legislation, Session
Law 2007-397 (Senate Bill 3), which, among other things, established a Renewable Energy
and Energy Efficiency Portfolio Standard (REPS), the first renewable energy portfolio
standard in the Southeast. Under the REPS, all electric power suppliers in North Carolina
must meet an increasing amount of their retail customers’ energy needs by a combination
of renewable energy resources (such as solar, wind, hydropower, geothermal and biomass)
and reduced energy consumption. Beginning at 3% of retail electricity sales in 2012, the
REPS requirement ultimately increases to 10% of retail sales beginning in 2018 for the
State’s EMCs and municipally-owned electric providers and 12.5% of retail sales beginning
in 2021 for the State’s electric public utilities.
In G.S. 62-133.8(j), the General Assembly required the Commission to make the
following annual report:
No later than October 1 of each year, the Commission shall submit a
report on the activities taken by the Commission to implement, and by
electric power suppliers to comply with, the requirements of this
section to the Governor, the Environmental Review Commission, and
the Joint Legislative Commission on Governmental Operations. The
report shall include any public comments received regarding direct,
secondary, and cumulative environmental impacts of the
implementation of the requirements of this section. In developing the
report, the Commission shall consult with the Department of
Environment and Natural Resources.2
On October 1, 2008, the Commission made its first annual report pursuant to
G.S. 62-133.8(j),3 and last year, on October 1, 2015, the Commission made its eighth
annual report.4 The remaining sections of this report detail, as required by the General
Assembly, developments related to Senate Bill 3, activities undertaken by the
Commission during the past year to implement Senate Bill 3, and actions by the electric
power suppliers to comply with G.S. 62-133.8, the REPS provisions of Senate Bill 3.
2 G.S. 62-133.8(j) was amended by Session Law 2011-291 to require that the annual REPS Report
be submitted to the Joint Legislative Commission on Governmental Operations, rather than the Joint
Legislative Utility Review Committee.
3 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding Energy
and EE Portfolio Standard, October 1, 2008 (2008 REPS Report).
4 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding Energy
and EE Portfolio Standard, October 1, 2015 (2015 REPS Report).
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2016 LEGISLATION
The 2016 General Assembly did not pass any legislation amending the
REPS.
COMMISSION IMPLEMENTATION
Rulemaking Proceeding
As detailed in the Commission’s 2008 REPS Report, after Senate Bill 3 was
signed into law the Commission initiated a proceeding in Docket No. E-100, Sub
113, to adopt rules to implement the REPS and other provisions of the new law.
On February 29, 2008, the Commission issued an Order adopting final rules
implementing Senate Bill 3. The rules, in part, require each electric power supplier
to file an annual REPS compliance plan and an annual REPS compliance report
to demonstrate, respectively, reasonable plans for, and actual compliance with,
the REPS requirement.
In its 2015 REPS Report, the Commission notes that it had issued a number
of orders interpreting various provisions of the REPS statute, in which it made the
following conclusions:
 Tennessee Valley Authority’s (TVA) distributors making retail sales in North
Carolina and electric membership corporations (EMCs) headquartered outside
of North Carolina that serve retail electric customers within the State must
comply with the REPS requirement of Senate Bill 3, but the university-owned
electric suppliers, Western Carolina University and New River Light & Power
Company, are not subject to the REPS requirement.
 Each electric power supplier’s REPS requirement, both the set-aside
requirements and the overall REPS requirements, should be based on its prior
year’s actual North Carolina retail sales.
 An electric public utility cannot use existing utility-owned hydroelectric
generation for REPS compliance, but may use power generated from new
small (10 MW or less) increments of utility-owned hydroelectric generating
capacity.
 The solar, swine waste and poultry waste set-aside requirements should have
priority over the general REPS requirement where both cannot be met without
exceeding the per-account cost cap established in G.S. 62-133.8(h).
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 The set-aside requirements may be met through the generation of power,
purchase of power, or purchase of unbundled renewable energy credits
(RECs).
 The 25% limitation on the use of out-of-state RECs applies to the general REPS
requirement and each of the individual set-aside provisions.
 The electric power suppliers are charged with collectively meeting the
aggregate swine waste and poultry waste set-aside requirements and may
agree among themselves how to collectively satisfy those requirements.
 RECs associated with the electric power generated at a biomass-fueled
combined heat and power (CHP) facility located in South Carolina and
purchased by an electric public utility in North Carolina would be considered as
in-state pursuant to G.S. 62-133.8(b)(2)(d), but RECs associated with out-of-state
renewable generation not delivered to and purchased by an electric
public utility in North Carolina and RECs associated with out-of-state
thermal energy would not be considered to be in-state RECs pursuant to
G.S. 62-133.8(b)(2)(d).
 Only RECs associated with the percentage of electric generation that results
from methane gas that was actually produced by poultry waste or swine waste
may be credited toward meeting the swine waste and poultry waste set-aside
requirements. Thus, not all of the methane gas produced by the anaerobic
digestion of swine or poultry waste, as well as “other organic biodegradable
material,” would qualify toward the set-aside requirements because the other
material described as mixed with the poultry waste or swine waste is
responsible for some percentage of the resulting methane gas.
 Issuance of a joint request for proposals (RFP) is a reasonable means for the
petitioners to work together collectively to meet the swine waste set-aside
requirement.
 A Pro Rata Mechanism (PRM) is a reasonable and appropriate means for the
State’s electric power suppliers to meet the aggregate swine waste and poultry
waste set-aside requirements of G.S. 62-133.8(e) and (f). As it had earlier done
with regard to the aggregate swine waste set-aside requirement, the
Commission approved the joint procurement of RECs from energy produced
by poultry waste, the sharing of poultry waste generation bids among electric
suppliers, and other collaborative efforts as a reasonable means for the State’s
electric suppliers to work together to meet the poultry waste set-aside
requirement.
 The term “allocations made by the Southeastern Power Administration”
(SEPA), is used as a term of art in G.S. 62-133.8(c)(2)(c). Therefore, a
municipal electric power supplier or EMC will be permitted to use the total
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annual amount of energy supplied by SEPA to that municipality or EMC to
comply with its respective REPS requirement, subject to the 30% limitation
provided in G.S. 62-133.8(c)(2)(c).
 RECs associated with the thermal energy output of a CHP facility which uses
poultry waste as a fuel should not be eligible for use to meet the poultry waste
set-aside requirement under G.S. 62-133.8(f) The Commission reasoned that
the legislature’s inclusion of the phrases “or an equivalent amount of energy”
and “new metered solar thermal energy facilities” in subsection (d), coupled
with the lack of similar express language in subsection (f), demonstrated a clear
legislative intent to allow solar thermal RECs to meet the solar set-aside
requirement, but not to allow thermal RECs to meet the poultry waste set-aside
requirement.
 An electric public utility can recover through its fuel cost rider the total delivered
cost of the purchase of energy generated by a swine or poultry waste-to-energy
facility where the RECs associated with the production of the energy are
purchased by another North Carolina electric power supplier to comply with the
REPS statewide aggregate swine waste and poultry waste set-aside
requirements.
 Amendments to NC-RETS Operating Procedures, Rules R8-64 through R8-69,
and an application form for use by owners of renewable energy facilities in
obtaining registration of a facility under Rule R8-66 should be adopted. The
amendments to Rules R8-64 through R8-69 clarify and streamline the
application procedures, registration, record keeping, and other requirements
for renewable energy facilities.
 Commission Rules R8-67(b), R8-67(c), and R8-67(h) should be amended by
adding a requirement that REPS compliance plans contain a list of planned and
implemented demand-side management (DSM) measures and include a
measurement and verification (M&V) plan if one is not already filed with the
Commission. Additionally, the amendment added reporting requirements to the
REPS Compliance Reports for EMCs regarding EE and implementation of
M&V plans. The Order also required all electric power suppliers to review the
number of energy efficiency (EE) certificates they have reported to date and
submit any changes necessitated by the Order.
 That Commission Rules R8-61, R8-63, and R8-64 should be amended by
adding to the previously existing requirement that an application for a certificate
of public convenience and necessity (CPCN) contain a map and location of the
facility. The amendments require additional information including: 1) the
proposed site layout relative to the map; 2) all major equipment, including the
generator, fuel handling equipment, plant distribution system, and start up
equipment; 3) the site boundary; 4) planned and existing pipelines, planned
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and existing roads, planned and existing water supplies, and planned and
existing electric facilities.
 That the electric power suppliers made a reasonable effort to comply with the
swine waste and poultry waste set-aside REPS requirements in 2012, but will
not be able to comply. The Order concluded that it was in the public interest to
eliminate the swine waste set-aside requirement in 2012, and to delay the
implementation of the poultry waste set-aside requirement by one year until
2013. In addition to modifying the compliance schedules for the swine waste
and poultry waste set-aside REPS requirements, the Order also required that
DEC and DEP file tri-annual progress reports on their compliance with, and
efforts to comply with, the swine waste and poultry waste set-aside
requirements.
 The electric power suppliers made a reasonable effort to comply with the swine
waste and poultry waste set-aside REPS requirements in 2013, but will not be
able to comply. The Order concluded that it was in the public interest to delay
the implementation of the swine and poultry waste set-aside requirements by
one year until 2014. Finally, the Order concluded that the triannual progress
reporting requirement established in the Commission’s 2012 Delay Order
should also apply to Dominion, GreenCo, FPWC, EnergyUnited, Halifax,
NCEMPA and NCMPA1.
 Proceeds from REC sales should be credited to customers if the RECs were
purchased with REPS rider proceeds, or if the RECs were produced via a
generating facility that was paid for by customers. Further, the Commission
determined that, since it cannot anticipate every scenario, it will review REC
sales on a case-by-case basis in REPS rider proceedings and general rate
cases, as the issues arise. The Commission further determined that the electric
public utility will have the burden of proving that each REC sale was in the best
interest of its customers and should file complete information regarding the
original purchase price, resale price, the cost of replacement RECs and any
incremental administrative costs or brokerage fees incurred pursuant to the
transaction.
 The electric power suppliers made a reasonable effort to comply with the swine
waste set-aside REPS requirement in 2014, but will not be able to comply. The
Commission’s determination was based on based on the tri-annual reports
submitted by the electric power suppliers in Docket No. E-100, Sub 113A, the
Petitioners’ motion, and the intervenors’ comments. The Commission found
that, among the reasons the electric power suppliers would not be able to
comply, is that the technology is in early stages of development. Additionally,
the Order directed the Public Staff to conduct two stakeholder meetings in 2015
to discuss potential obstacles to achieving the swine and poultry waste
requirements and options for addressing them. Finally, the Order concluded
that the triannual progress reporting requirement established in the
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Commission’s 2012 Delay Order and expanded in the Commission’s 2013
Delay Order should continue until the Commission finds that they are no longer
necessary.
This Order resulted in the following updated compliance schedules for the
swine waste set-aside REPS requirement:
Calendar Year Requirement for Swine Waste Resources
2015-2016 0.07%
2017-2019 0.14%
2020 and thereafter 0.20%
 On June 3, 2014, the Commission issued an Order Requesting Comments
regarding the potential changes to Rules R8-64 and R8-65, as well as the
reporting requirements in Docket No. E-100, Subs 101, 83, and 41B (June
Order). In the June Order, the Commission took note that, over the past few
years, a large number of facilities, particularly solar photovoltaic, have been
filing applications for CPCNs. However, it is currently unclear whether
certificate holders for solar facilities are complying with this construction
progress report requirement. Further, due to the fact that there is no
requirement for notice of completion, the Commission cannot easily discern
how many facilities are actually being built. The June Order requested that
interested parties file comments by June 30, 2014, and that reply comments be
filed by July 21, 2014.
 It would be appropriate to streamline current reporting requirements to provide
a more coherent and complete picture of the status of non-utility generators
within North Carolina. The Commission’s order states that a consolidated report
would be beneficial to all parties. The Order required DEC, DEP and Dominion
to file by March 31, of each year, beginning March 31, 2015, three lists with the
following information:
a. An Interconnection Application List of all applications in the
utility’s interconnection queue that provides the owner’s name,
Commission Docket No., AC capacity (kW), fuel type(s), application
date, county and interconnection application status;
b. An Interconnection List of all generators interconnected with the
utility’s system in North Carolina that provides the owner’s name,
Commission Docket No., AC capacity (kW), fuel type(s), power delivery
date, county and whether the facility is net metering; and
c. A Purchased Power Agreement List of all facilities with which the
utility has a purchased power agreement (or application) that provides
the owner’s name, Commission Docket No., AC capacity (kW), fuel
type(s), energized date, tariff name(s), term (years), county and PPA
application status.
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Concurrently, the Order repealed the reporting requirement contained in
Commission Rule R8-64(e).
Since the October 1, 2015 report was submitted, the Commission has
issued a number of additional Orders interpreting various provisions of the REPS
statute and seeking additional information to aid the Commission in future
interpretations. The following Orders are of particular interest:
Order Modifying the Swine and Poultry Waste Set-Aside
Requirements and Providing Other Relief, Docket No. E-100, Sub 113
(December 1, 2015)
On August 12, 2015, DEC, DEP, Dominion, GreenCo, FPWC,
EnergyUnited, Halifax, TVA, NCEMPA, and NCMPA1 (Joint Movants) filed
a joint motion to modify and delay the 2015 swine and poultry waste
set-aside requirements of G.S. 62-133.8(e) and (f), respectively. Joint
Movants requested that the Commission relieve them of compliance with
the swine and poultry waste set-aside requirements by delaying their need
to comply with these requirements by one year until 2016. The Joint
Movants state that they have individually and collectively made reasonable
efforts to comply with the REPS swine and poultry waste resource
provisions. On August 18, 2015, the Commission issued an Order
Requesting Comments. On October 2, 2015, the North Carolina Poultry
Federation, the Public Staff and NCSEA filed comments. On October 9,
2015, North Carolina Pork Council and Optima KV, LLC, filed comments.
On October 16, 2015, DEC and DEP filed supplemental comments.
On December 1, 2015, the Commission issued an Order Modifying
the Swine and Poultry Waste Set-Aside Requirements and Providing Other
Relief. The Order concluded that the electric suppliers made a reasonable
effort to comply with the swine and poultry waste set-aside REPS
requirements in 2015, but would not be able to comply. As to the swine
waste set-aside requirement, the Commission notes that despite allowing
electric power suppliers to bank RECs for three years, the cumulative effect
of this banking has yet to result in the ability to comply with the initial swine
waste set-aside. Therefore, the Commission concluded that it is in the public
interest to delay the entire requirement of G.S. 62-133.8(e) for one year and
allow electric power suppliers to continue to bank RECs for swine waste
set-aside requirement compliance in future years. As to the poultry waste
set-aside requirement, the Commission notes that compliance has been
hindered by the fact that the technology of power production from poultry
waste continues to be in its early stages of development. No party
presented evidence that the aggregate 2015 poultry waste set-aside could
be met, however, the Public Staff, DEC and DEP state that, due to the
availability of RECs pursuant to Section 4 of S.L. 2010-195, as amended by
S.L. 2011-279 (Senate Bill 886), the 2014 level of the poultry waste
set-aside could be maintained. Therefore, the Commission concluded that
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the poultry waste set-aside requirement should be modified by adding an
additional year (2015) of compliance at the 170,000 MWh threshold, prior
to escalating the requirement to 700,000 MWh.
The Order resulted in the following updated compliance schedules
for the swine waste and poultry waste set-asides REPS requirements:
Calendar Year Requirement for Swine Waste Resources
2016-2017 0.07%
2018-2020 0.14%
2021 and thereafter 0.20%
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 MWh
2015 170,000 MWh
2016 700,000 MWh
2021 and thereafter 900,000 MWh
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, DEC, Dominion,
GreenCo, FPWC, EnergyUnited, Halifax, TVA, NCMPA1, and NCEMPA,
filed a motion to delay the requirements of the 2016 swine waste set-aside
and to modify the requirements of the poultry waste set-aside. The
Commission has requested comments on the matter and it is pending
before the Commission.
Order Establishing 2015 Poultry Waste Set-Aside Requirement
Allocation, Docket No. E-100, Sub 113 (December 15, 2014)
On October 19, 2015 in Docket No. E-100, Sub 113, the Commission
issued an Order Addressing Poultry Compliance Shortfall and Requesting
Comments on New Allocation Method. In that Order, the Commission found
that the current functionality in NC-RETS for allocating the aggregate
poultry waste set-aside requirement is “too dynamic” in that every electric
power supplier’s obligation changes whenever one electric power supplier
corrects a retail sales data That Order also requested comments as to
alternative methods of allocating the aggregate poultry waste set-aside
requirement to be filed by December 30, 2015 and reply comments to be
filed by January 29, 2016.
On December 15, 2015, the Commission issued an Order
Establishing 2015 Poultry Waste Set-Aside Requirement Allocation. The
Commission recognized that the pendency of the matter regarding the
allocation of the aggregate poultry waste set-aside requirement for 2015
created uncertainty for electric power suppliers. Therefore, the Commission
found good cause to clarify the allocation of the aggregate poultry waste
set-aside requirement for compliance year 2015. The Order established that
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the 2014 retail sales data reported to NC-RETS by electric power suppliers
and utility compliance aggregators, shall be used to allocate, on a pro-rata
basis, the 170,000 MWh aggregate poultry waste set-aside requirement for
2015.
Order Establishing Method of Allocating the Aggregate Poultry
Waste Resource Set-Aside Requirement, Docket E-100, Sub 113
(April 18, 2016)
On October 19, 2015 in Docket No. E-100, Sub 113, the Commission
issued an Order Addressing Poultry Compliance Shortfall and Requesting
Comments on New Allocation Method. In that Order, the Commission found
that the current functionality in NC-RETS for allocating the aggregate
poultry waste set-aside requirement is “too dynamic” in that every electric
power supplier’s obligation changes whenever one electric power supplier
corrects a retail sales data error. That Order also requested comments as
to alternative methods of allocating the aggregate poultry waste set-aside
requirement to be filed by December 30, 2015 and reply comments to be
filed by January 29, 2016. On December 30, 2015, DEC and DEP jointly
filed comments as did the Public Staff. No reply comments were filed. DEC’s
and DEP’s joint comments and those of the Public Staff were in agreement
as to a proposed method of allocating the aggregate poultry waste set-aside
requirement based on three years of average annual retail sales with the
resulting allocation held constant for three years. No party opposed this
recommendation.
On April 18, 2016, in Docket No. E-100, Sub 113, the Commission
issued an Order Establishing Method of Allocating the Aggregate Poultry
Waste Resource Set-Aside Requirement concluding that the proposal put
forward by the Public Staff and supported by DEC and DEP is a reasonable
way to proceed. The Order established that, starting with the 2016
compliance year, the aggregate poultry waste set-aside obligation shall be
allocated among the electric power suppliers by averaging three years of
historic retail sales (2013, 2014, and 2015), with the resulting allocation held
constant for three years (2016, 2017, and 2018).
Order on NCSEA’s Request, Docket No. E-100, Sub 113
(June 6, 2016)
On June 1, 2015, NCSEA filed a Request for Declaratory Ruling on
Meaning of G.S. 62-133.9 and Commission Rule R8-67. In summary,
NCSEA requested that the Commission issue a declaratory ruling that a
new topping cycle combined heat and power (CHP) system, including such
a system that uses nonrenewable energy resources, that both produces
electricity or useful, measureable thermal or mechanical energy at a retail
customer’s facility and results in less energy being used to perform the
26
same function or provide the same level of service at the retail electric
customer’s facility constitutes an “energy efficiency measure” for purposes
of G.S. 62-133.9 and Commission Rule R8-67. DEC and DEP jointly filed
comments arguing that topping cycle CHP systems do not use waste heat
to produce electricity, and therefore, do not qualify as energy efficiency
measures under G.S. 62-133.8(a)(4), except to the extent that they use
waste heat to produce electricity or useful, measureable thermal or
mechanical energy. The Public Staff filed comments supporting an
interpretation of the REPS statute that would only allow electricity or
measureable useful energy from the waste heat component of a topping
cycle CHP to qualify for energy efficiency. On October 14, 2015, NCSEA
filed reply comments responding to the other parties’ comments.
On June 6, 2016, in Docket No. E-100, Sub 113, the Commission
issued an Order on NCSEA’s Request concluding that a topping cycle
combined heat and power system does not constitute an energy efficiency
measure under G.S. 62-133.8(a)(4), except to the extent that the secondary
component, the waste heat component, is used. On June 6, 2016, NCSEA
filed a Notice of Appeal and Exceptions. This matter is pending before the
North Carolina Court of Appeals.
Order Establishing the 2016, 2017, and 2018 Poultry Waste Set-Aside
Requirement Allocation
On August 5, 2016, in Docket No. E-100, Sub 113, the Commission
Issued an Order Establishing the 2016, 2017, and 2018 Poultry Waste
Set-Aside Requirement Allocation. The Order established that the
aggregate poultry waste set-aside requirement for 2016, 2017, and 2018
shall be allocated among the electric power suppliers and utility compliance
aggregators based on the load ratio share calculations filed by the
NC-RETS administrator in Docket No. E-100, Sub 113 on July 11, 2016 and
the methodology previously adopted by the Commission. The resulting
requirements will be held constant for three years, and the allocation
process will be repeated in 2018 in order to set the allocation requirements
for compliance years 2019, 2020, and 2021.
Renewable Energy Facilities
The REPS statute defines certain electric generating facilities as renewable
energy facilities or new renewable energy facilities. RECs associated with electric
or thermal power generated at such facilities may be used by electric power
suppliers for compliance with the REPS requirement as provided in
G.S. 62-133.8(b) and (c). In its rulemaking proceeding, the Commission adopted
rules providing for a report of proposed construction, certification or registration of
renewable energy facilities and new renewable energy facilities.
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Pursuant to G.S. 62-110.1(a), no person, including any electric power
supplier, may begin construction of an electric generating facility in North Carolina
without first obtaining from the Commission a certificate of public convenience and
necessity (CPCN). Two exemptions from this certification requirement are provided
in G.S. 62-110.1(g): (1) self-generation, and (2) nonutility-owned renewable
generation under 2 MW. Any person exempt from the certification requirement must,
nevertheless, file a report of proposed construction with the Commission pursuant
to Rule R8-65.
To ensure that each renewable energy facility from which electric power or
RECs are used for REPS compliance meets the particular requirements of Senate
Bill 3, the Commission adopted Rule R8-66 to require that the owner, including an
electric power supplier, of each renewable energy facility or new renewable energy
facility register with the Commission if it intends for RECs it earns to be eligible for
use by an electric power supplier for REPS compliance. This registration
requirement applies to both in-state and out-of-state facilities. As of September 1,
2016, the Commission has accepted registration statements filed by 1419 facilities.
As detailed in the 2015 REPS Report, the Commission has issued a number
of orders addressing issues related to the registration of a facility, including the
definition of “renewable energy resource,” as summarized below.
 Accepted registration as a new renewable energy facility a 1.6-MW electric
generating facility to be located near Clinton in Sampson County, North Carolina,
and fueled by methane gas produced from anaerobic digestion of organic wastes
from a Sampson County pork packaging facility and from a local swine farm.
 Issued a declaratory ruling that: (1) the percentage of refuse-derived fuel (RDF)
that is determined by testing to be biomass, and the synthesis gas (Syngas)
produced from that RDF is a “renewable energy resource” as defined in
G.S. 62-133.8(a)(8); (2) the applicant’s delivery of Syngas from a co-located
gasifier to an electric utility boiler would not make the company a “public utility” as
defined in G.S. 62-3(23); and (3) the applicant’s construction of a co-located
gasifier and the piping connection from the gasifier to an existing electric utility
boiler would not require a CPCN under G.S. 62-110(a) or under G.S. 62-110.1(a).
 Issued an Order amending existing CPCNs for two electric generating facilities
in Southport and Roxboro, North Carolina, that were being converted to burn a
fuel mix of coal, wood waste, and tire-derived fuel (TDF). The Commission
concluded that the portion of TDF derived from natural rubber, an organic
material, meets the definition of biomass, and is eligible to earn RECs, but
required the applicant to submit additional information to demonstrate the
percentage of TDF that is derived from natural rubber. In addition, the
Commission accepted registration of the two facilities as new renewable energy
facilities.
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 Accepted registration as a new renewable energy facility a 1.6-MW CHP facility
to be located in Darlington County, South Carolina, that will generate electricity
using methane gas produced via anaerobic digestion of poultry litter from a
chicken farm mixed with other organic, biodegradable materials, and use the
waste heat from the electric generators to provide temperature control for the
methane-producing anaerobic digester as well as the chicken houses. The
Commission concluded that the thermal energy used as an input back into the
anaerobic digestion process effectively increases the efficiency of the electric
production from the facility; but is not used to directly produce electricity or
useful, measureable thermal or mechanical energy at a retail electric
customer’s facility pursuant to G.S. 62-133.8(a)(1); and is not eligible for RECs.
However, the thermal energy that is used to heat the chicken houses is eligible
to earn RECs.
 Issued a declaratory ruling that: (1) biosolids, the organic material remaining
after treatment of domestic sewage and combusted at the applicant’s
wastewater treatment plant, are a “renewable energy resource” as defined by
G.S. 62-133.8(a)(8); and (2) the applicant, a county water and sewer authority
organized in 1992 pursuant to the North Carolina Water and Sewer Authorities
Act, is specifically exempt from regulation as a public utility pursuant to
G.S. 62-3(23)(d).
 Accepted for registration as a new renewable energy facility a solar thermal hot
water heating facility located in Mecklenburg County, North Carolina, used to
heat two commercial swimming pools. The Commission concluded, however,
that as an unmetered solar thermal facility, RECs earned based on the capacity
of the solar panels are not eligible to meet the solar set-aside requirement of
G.S. 62-133.8(d). However, the Commission allowed the applicant to earn
general thermal RECs based upon an engineering analysis of the energy from
the unmetered solar thermal system that is actually required to heat the pools,
which was determined to be substantially less than the capacity of the solar
thermal panels.
 Issued an Order concluding that primary harvest wood products, including
wood chips from whole trees, are “biomass resources” and “renewable energy
resources” under G.S. 62-133.8(a)(8). The Commission reasoned that the
General Assembly, by including several specific examples of biomass in the
statute, did not intend to limit the scope of the term to those examples. Rather,
the term “biomass” encompasses a broad category of resources and should
not be limited absent express intent to do so. The Environmental Defense Fund
and NCSEA appealed the Commission’s Order to the North Carolina Court of
Appeals. On August 2, 2011, the Court of Appeals issued a decision affirming
the Commission’s Order.
 Issued an Order declaring that yard waste and the percentage of RDF used as
fuel are renewable energy resources, and that the percentage of Syngas
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produced from yard waste and RDF used as fuel is a renewable energy
resource. The Commission held that yard waste is an organic material having
a constantly replenished supply, and, thus, is a renewable resource under
G.S. 62-133.8(a)(8).
 Accepted for registration as a new renewable facility a CHP facility, determining
that the portion of electricity produced by landfill gas will be eligible to earn
RECs and the portion of waste steam produced from the electric turbines that
is used as an input for a manufacturing process will be eligible to earn thermal
RECs. However, the Commission also concluded that steam that bypasses the
turbine generators and waste heat being used to pre-heat the feedwater for the
boilers will not be used to directly produce electricity or useful, measureable
thermal or mechanical energy at a retail electric customer’s facility pursuant to
G.S. 62-133.8(a)(1), and, therefore, will not be eligible to earn RECs.
 Accepted registration of residential solar thermal water heating facilities on over
one thousand homes which were allowed to install meters on a representative
sample of the homes, rather than on each home, to determine the number of
British Thermal Units (BTUs) of thermal energy that will be produced and on
which RECs will be earned, and assigned to the unmetered homes the thermal
heat measures recorded on the metered homes.
 Issued an Order accepting the registrations of nine solar thermal facilities, but
found that a request for a waiver of the requirement in G.S. 62-133.8(d) that
solar thermal energy be measured by a meter in order to produce RECs eligible
to meet the solar set-aside requirement was inappropriate, disallowing the use
of RETScreen Analysis Software (RETScreen) to calculate the estimated solar
thermal production of each facility. The Commission notes that there was no
cited or known legal authority by which the Commission is authorized to grant
such a waiver. Further, the Commission concluded that the use of RETScreen
is not appropriate because it estimates the total amount of solar thermal energy
that could be produced, rather than the amount of energy actually used to heat
water.
 The Commission denied the registration of a thermal system as a new
renewable energy facility based upon the fact that the system would be
integrated into an existing biomass facility and the thermal energy would be
used to pre-heat the feed water entering the biomass-fueled boiler resulting in
the use of less biomass fuel. The Commission concluded that it was
appropriate to view the facility as one entity eligible to earn RECs on the
electrical output of the biomass-fueled boiler, rather than two separate entities
capable of earning RECs.
 Granted CPCNs with conditions and accepted registrations as new renewable
energy facilities for a 300-MW wind facility in Pasquotank and Perquimans
Counties and an 80-MW wind facility in Beaufort County.
30
 Issued an Order declaring that directed biogas is a renewable energy resource.
The Commission’s order states that for a facility to earn RECs on electricity
created using directed biogas appropriate attestations must be made and
records kept regarding the source and amounts of biogas injected into the
pipeline and used by the facility to avoid double counting. The Commission’s
order further notes that as provided in Commission Rule R8-67(d)(2) a facility
utilizing directed biogas would earn RECs “based only upon the energy derived
from renewable energy resources in proportion to the relative energy content
of the fuels used.” Finally, the Commission notes that each facility’s registration
will be considered on a case-by-case basis, and that the Commission had not
addressed whether RECs earned would be subject to the out-of-state limitation
on unbundled RECs under G.S. 62-133.8(b)(2)(e).
 Issued an Order stating that the policy that only net output is eligible for the
issuance of RECs was not based solely on the definition of “station service” in the
Commission rules, but that G.S. 62.133.8(a)(6) requires that RECs be derived
from “electricity or equivalent energy” that is “supplied by a renewable energy
facility.” The Commission held that gross electricity used to power the facility
itself cannot be considered electricity “supplied by a renewable energy facility.”
The Commission interpreted “station service” to encompass all electric demand
consumed at the generation facility that would not exist but for the generation itself,
including, but not limited to, lighting, office equipment, heating, and air-conditioning
at the facility.
 Issued an Order finding that, because compensation could be built into
alternative financial arrangements to recover the costs of electric generation, a
scenario in which an electricity producer sold steam and gave away electricity
must be considered “[p]roducing, generating, transmitting, delivering, or
furnishing electricity … to or for the public for compensation” under
G.S. 62-3(23)a.1. The Commission notes that were it to rule otherwise it would
create multiple scenarios in which an electric generator could provide electrical
services “free of charge” to a third party and build in compensation to recover
its costs via other arrangements, thus, avoiding the statutory definition of a
public utility in G.S. 62-3(23)a.1.
 Issued an Order on Request for Declaratory Ruling addressing the eligible
output, pursuant to S.L. 2010-195 (Senate Bill 886), to which triple credit is
applied to any electric power or RECs generated by an eligible facility. The
Commission held that, although the first 20 MW of biomass renewable energy
facility generating capacity remained eligible for the triple credit, only the first
10 MW of biomass renewable energy facility generating capacity was eligible
to earn additional credits to meet the poultry waste set-aside requirements in
G.S. 62-133.8(f). The Commission held that the limit was on the electric
generating capacity, not the amount of energy or RECs that may be earned,
and that RECs may be derived from both the electric generation and the waste
31
heat used to produce electricity or useful, measurable thermal or mechanical
energy at a retail electric customer's facility
 Issued an Order accepting amended registrations of a 1.9-MWAC Directed
Biogas-fueled combined heat and power (CHP) facility and a 1.6-MWAC
biomass fueled CHP facility that would generate electricity through the pyrolysis
of wood (the first of this type registered in the State). Both facilities were
certified bv the Secretary of State as being located in a “cleanfields renewable
energy demonstration parks.”
 Issued an Order revoking the registrations of 63 facilities registered as
renewable energy facilities or as new renewable energy facilities with the
Commission. The owners of the 63 facilities listed in Appendices A and B of the
Order did not complete their annual certifications on or before October 15,
2014, as required by the Commission’s September 9, 2014 Order, nor had an
annual certification been completed for these facilities as of the date of the
Order. The Order states that should the owner of a facility whose registration
has been revoked wish to have the energy output from its facility become
eligible for compliance with the REPS; the owner must again register the facility
with the Commission.
 Issued an Order Accepting Registration of Incremental Capacity as a New
Renewable Energy Facility, finding that, consistent with previous Commission
orders, the incremental capacity of Weyerhaeuser NR Company’s renovated
CHP system, added subsequent to January 1, 2007, is a “new” renewable
energy facility pursuant to G.S. 62-133.8(a)(7). Weyerhaeuser was required to
register a new project for the incremental portion in NC-RETS to facilitate the
issuance of RECs, with 22.1% of the facility’s electric generation and 12.2% of
the facility’s thermal generation reported for the new project and the remainder
for the existing project.
 Issued an Order giving notice of its intent to revoke the registration of
233 renewable energy facilities and new renewable energy facilities because
their owners had not completed or filed the annual certifications required each
April 1, as detailed in Commission Rule R8-66(b) (44 facilities registered with
NC-RETS did not complete the on-line form and 189 did not file a verified
certification with the Commission). Facility owners were given until October 1,
2015, to file their annual certifications belatedly. Owners that do not complete
the annual certifications face their facility’s registrations being revoked
pursuant to Commission Rule R8-66(f). The matter is pending before the
Commission.
Since the October 1, 2015 report was submitted, the Commission has
issued additional orders interpreting provisions of the REPS Statute regarding
applications for registration of renewable energy facilities, as described below.
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Order Revoking Registration of Renewable Energy Facilities
and New Renewable Energy Facilities, Docket No. E-100, Sub 130
(December 2, 2015).
On December 2, 2015, the Commission issued an Order revoking
the registrations of 127 facilities registered with the Commission as
renewable energy facilities or as new renewable energy facilities. The
owners of the 127 facilities did not complete their annual certifications on or
before October 1, 2015, as required by the Commission’s August 12, 2015
Order, nor had an annual certification been completed for these facilities as
of the date of the Order. The Order states that should the owner of a facility
whose registration has been revoked wish to have the energy output from
its facility become eligible for compliance with the REPS, the owner must
again register the facility with the Commission.
Order Accepting Registration of New Renewable Energy
Facilities, Docket No. E-7, Subs 1086 and 1087 (March 11, 2016).
On June 8, 2015, DEC filed registration statements as new
renewable energy facilities for its Buck and Dan River combined-cycle
generating facilities, respectively. DEC states that Buck and Dan River will
be combusting directed biogas derived from swine waste and other biomass
to generate electricity for DEC’s customers. DEC further states that it has
entered contracts with biogas suppliers that will produce biogas by
anaerobic digestion of swine waste and other biomass at facilities located
in the Midwest. The biogas produced by the biogas suppliers will be cleaned
to pipeline quality, metered, injected into the interstate pipeline system, and
nominated for use by DEC at Buck and Dan River.
On March 11, 2016, the Commission issued an Order Accepting
Registration of New Renewable Energy Facilities, accepting the registration
of DEC’s Buck and Dan River combined-cycle facilities as new renewable
energy facilities. Consistent with previous Commission orders, the
Commission found that when biogas derived from anaerobic digestion of
animal waste is injected into the natural gas pipeline, nominated for use by
a natural gas-fueled electric generating facility, and a proper showing can
be made that it is displacing or offsetting conventional natural gas, it is a
renewable energy resource pursuant to G.S. 62-133.8(a)(5). Noting that
Buck and Dan River were placed into service subsequent to January 1,
2007, the Commission concluded that those facilities are “new renewable
energy facilities” pursuant to G.S. 62-133.8(a)(7). The Commission further
concluded that the RECs associated with the renewable energy generated
at Buck and Dan River from directed biogas will not be deemed out-of-State
RECs subject to the 25% limitation on the use for REPS compliance of
unbundled out-of-State RECs.
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Order Giving Notice of Intent to Revoke Registration of
Renewable Energy Facilities and New Renewable Energy Facilities,
Docket No. E-100, Sub 130 (August 25, 2016).
On August 25, 2016, the Commission issued an Order giving notice
of its intent to revoke the registration of 26 renewable energy facilities and
215 new renewable energy facilities because their owners had not
completed or filed the annual certifications required each April 1, as detailed
in Commission Rule R8-66(b). Facility owners were given until October 1,
2016, to file their annual certifications belatedly. Owners that do not
complete the annual certifications face their facility’s registrations being
revoked pursuant to Commission Rule R8-66(f). The matter is pending
before the Commission.
North Carolina Renewable Energy Tracking System (NC-RETS)
In its February 29, 2008 Order in Docket No. E-100, Sub 113, the
Commission concluded that REPS compliance would be determined by tracking
RECs associated with renewable energy and EE. In its Order, the Commission
further concluded that a “third-party REC tracking system would be beneficial in
assisting the Commission and stakeholders in tracking the creation, retirement and
ownership of RECs for compliance with Senate Bill 3” and states that “[t]he
Commission will begin immediately to identify an appropriate REC tracking system
for North Carolina.” Pursuant to G.S. 133.8(k), enacted in 2009, the Commission
was required to develop, implement, and maintain an online REC tracking system
no later than July 1, 2010, in order to verify the compliance of electric power
suppliers with the REPS requirements.
On September 4, 2008, the Commission issued an Order in Docket
No. E-100, Sub 121, initiating a new proceeding to define the requirements for a
third-party REC tracking system, or registry, and to select an administrator. The
Commission established a stakeholder process to finalize a Requirements
Document for the tracking system.
After issuing an RFP and evaluating the bids received, the Commission
signed a Memorandum of Agreement (MOA) with APX, Inc. (APX), on
February 2, 2010, to develop and administer NC-RETS. Pursuant to the MOA, on
July 1, 2010, APX successfully launched NC-RETS. By letter dated
September 3, 2010, the Commission informed APX that, to the best of its
knowledge, NC-RETS has performed in substantial conformance with the MOA and
has no material defects. The Commission, therefore, authorized APX to begin billing
North Carolina electric power suppliers and other users the fees that were
established in the MOA.
Funding for NC-RETS is provided directly to APX by the electric power
suppliers in North Carolina that are subject to the REPS requirements of
34
Senate Bill 3 and is recovered from the suppliers’ customers through the
REPS incremental cost rider. Owners of renewable energy facilities and other
NC-RETS users do not incur charges to open accounts, register projects, and
create and transfer RECs, but will incur nominal fees to export RECs to other
tracking systems or to retire RECs other than for REPS compliance.
At the end of 2015, each electric power supplier was required to place the
RECs that it acquired to meet its 2015 REPS requirements into compliance
accounts where the RECs are available for audit. The Commission will review each
electric power suppliers’ 2015 REPS compliance report; the associated RECs will
be permanently retired. Members of the public can access the NC-RETS web site
at www.ncrets.org. The site’s “Resources” tab provides extensive information
regarding REPS activities and NC-RETS account holders. NC-RETS also provides
an electronic bulletin board where RECs can be offered for purchase.
 As of December 31, 2015, NC-RETS had issued 39,291,430 RECs and
7,598,087 EE certificates. These numbers could increase because
renewable energy generators are allowed to enter historic production
data for up to two years.
 As of September 1, 2016, 470 organizations, including electric power
suppliers and owners of renewable energy facilities, had established
accounts in NC-RETS.
 As of September 1, 2016, approximately 1006 renewable energy or new
renewable energy facilities had been established as NC-RETS projects,
enabling the issuance of RECs based on their energy production data.
Pursuant to the MOA, APX has been working with other registries in the
United States, such as the Electric Reliability Council of Texas (ERCOT), to
establish procedures whereby RECs that were issued in those registries may be
transferred to NC-RETS. To date, such arrangements have been established with
five such registries. Additionally, the Commission has established an on-going
NC-RETS stakeholder group, providing a forum for resolution of issues and
discussion of system improvements.
The original MOA with APX expired on December 31, 2013. Based on
feedback received from stakeholders, the Commission extended the MOA with
APX through 2017.
Environmental Impacts
Pursuant to G.S. 62-133.8(j), the Commission was directed to consult with
the North Carolina Department of Environmental Quality (DEQ) in preparing its
report and to include any public comments received regarding direct, secondary,
and cumulative environmental impacts of the implementation of the REPS
35
requirements of Senate Bill 3. The Commission has not identified, nor has it
received from the public or DEQ, any public comments regarding direct,
secondary, and cumulative environmental impacts of the implementation of the
REPS provision of Senate Bill 3. DEQ, in response to the Commission’s request,
notes impacts on North Carolina’s air, water and land quality. DEQ’s full response
is attached to this report as a part of Appendix 1.
ELECTRIC POWER SUPPLIER COMPLIANCE
Pursuant to Senate Bill 3, electric power suppliers are required, beginning
in 2012, to meet an increasing percentage of their retail customers’ energy needs
by a combination of renewable energy resources and energy reductions from the
implementation of EE and DSM measures. Also, pursuant to Senate Bill 3, starting
in 2012, part of the REPS requirements must be met through poultry waste and
swine waste (as discussed above this requirement has been amended by the
Commission.) In addition, beginning in 2010 each electric power supplier was
required to meet a certain percentage of its retail electric sales “by a combination
of new solar electric facilities and new metered solar thermal energy facilities that
use one or more of the following applications: solar hot water, solar absorption
cooling, solar dehumidification, solar thermally driven refrigeration, and solar
industrial process heat.” G.S. 62-133.8(d). An electric power supplier is defined as
“a public utility, an electric membership corporation, or a municipality that sells
electric power to retail electric power customers in the State.” G.S. 62-133.8(a)(3).
Described below are the REPS requirements for the various electric power
suppliers and, to the extent reported to the Commission, the efforts of each toward
REPS compliance.
Monitoring of Compliance with REPS Requirement
Monitoring of electric power supplier compliance with the REPS
requirement of Senate Bill 3 is accomplished through annual filings with the
Commission. The rules adopted by the Commission require each electric power
supplier to file an annual REPS compliance plan and REPS compliance report to
demonstrate reasonable plans for and actual compliance with the REPS
requirement.
Compliance plan
Pursuant to Commission Rule R8-67(b), on or before September 1 of each
year, each electric power supplier is required to file with the Commission a REPS
compliance plan providing, for at least the current and following two calendar
years, specific information regarding its plan for complying with the REPS
requirement of Senate Bill 3. The information required to be filed includes, for
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example, forecasted retail sales, RECs earned or purchased, EE measures
implemented and projected impacts, avoided costs, incremental costs, and a
comparison of projected costs to the annual per-account cost caps.
Compliance report
Pursuant to Commission Rule R8-67(c), each electric power supplier is
required to annually file with the Commission a REPS compliance report. While a
REPS compliance plan is a forward-looking forecast of an electric power supplier’s
REPS requirement and its plan for meeting that requirement, a REPS compliance
report is an annual look back at the RECs earned or purchased and energy savings
actually realized during the prior calendar year and the electric power supplier’s
actual progress toward meeting its REPS requirement. Thus, as part of this annual
REPS compliance report, each electric power supplier is required to provide
specific information regarding its experience during the prior calendar year,
including, for example, RECs actually earned or purchased, retail sales, avoided
costs, compliance costs, status of compliance with its REPS requirement, and
RECs to be carried forward to future REPS compliance years. An electric power
supplier must file with its REPS compliance report any supporting documentation
as well as the direct testimony and exhibits of expert witnesses. The Commission
will schedule a hearing to consider the REPS compliance report filed by each
electric power supplier.
For each electric public utility, the Commission will consider the REPS
compliance report and determine the extent of compliance with the REPS
requirement at the same time as it considers cost recovery pursuant to the REPS
incremental cost rider authorized in G.S. 62-133.8(h). Each EMC and
municipally-owned electric utility, over which the Commission does not exercise
ratemaking authority, is required to file its REPS compliance report on or before
September 1 of each year.
Cost Recovery Rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider to recover the incremental costs incurred to comply with the REPS
requirement and to fund certain research. The annual rider, however, may not
exceed the following per-account annual charges:
Customer Class 2008-2011 2012-2014 2015 and thereafter
Residential per account $10.00 $12.00 $34.00
Commercial per account $50.00 $150.00 $150.00
Industrial per account $500.00 $1,000.00 $1,000.00
Commission Rule R8-67(e) establishes a procedure under which the
Commission will consider approval of a REPS rider for each electric public utility.
The REPS rider operates similar to the fuel charge adjustment rider authorized in
37
G.S. 62-133.2. Each electric public utility is required to file its request for a REPS
rider at the same time as it files the information required in its annual fuel charge
adjustment proceeding, which varies for each utility. The test periods for both the
REPS rider and the fuel charge adjustment rider are the same for each utility, as
are the deadlines for publication of notice, intervention, and filing of testimony and
exhibits. A hearing on the REPS rider will be scheduled to begin as soon as
practicable after the hearing held by the Commission for the purpose of
determining the utility’s fuel charge adjustment rider. The burden of proof as to
whether the REPS costs were reasonable and prudently incurred shall be on the
electric public utility. Like the fuel charge adjustment rider, the REPS rider is
subject to an annual true-up, with the difference between reasonable and prudently
incurred incremental costs and the revenues that were actually realized during the
test period under the REPS rider then in effect reflected in a REPS experience
modification factor (REPS EMF) rider. Pursuant to G.S. 62-130(e), any over-collection
under the REPS rider shall be refunded to a utility’s customers with
interest through operation of the REPS EMF rider.
Electric Public Utilities
There are three electric public utilities operating in North Carolina subject to
the jurisdiction of the Commission: DEP, DEC, and Dominion. Although DEC and
DEP underwent a merger in 2012, for REPS compliance purposes they continue
to operate as two distinct entities.
REPS requirement
G.S. 62-133.8(b) provides that each electric public utility in the State (DEC,
DEP, and Dominion) shall be subject to a REPS requirement according to the
following schedule:
Calendar Year REPS Requirement
2012 3% of prior year’s North Carolina retail sales
2015 6% of prior year’s North Carolina retail sales
2018 10% of prior year’s North Carolina retail sales
2021 and thereafter 12.5% of prior year’s North Carolina retail sales
An electric public utility may meet the REPS requirement by any one or more of
the following:
 Generate electric power at a new renewable energy facility.
 Use a renewable energy resource to generate electric power at a
generating facility other than the generation of electric power from
waste heat derived from the combustion of fossil fuel.
 Reduce energy consumption through the implementation of an
EE measure; provided, however, an electric public utility subject to
38
the provisions of this subsection may meet up to 25% of the
requirements of this section through savings due to implementation
of EE measures. Beginning in calendar year 2021 and each year
thereafter, an electric public utility may meet up to 40% of the
requirements of this section through savings due to implementation
of EE measures.
 Purchase electric power from a new renewable energy facility.
Electric power purchased from a new renewable energy facility
located outside the geographic boundaries of the State shall meet
the requirements of this section if the electric power is delivered to a
public utility that provides electric power to retail electric customers
in the State; provided, however, the electric public utility shall not sell
the RECs created pursuant to this paragraph to another electric
public utility.
 Purchase RECs derived from in-state or out-of-state new renewable
energy facilities. Certificates derived from out-of-state new
renewable energy facilities shall not be used to meet more than 25%
of the requirements of this section, provided that this limitation shall
not apply to Dominion.
 Use electric power that is supplied by a new renewable energy facility
or saved due to the implementation of an EE measure that exceeds
the requirements of this section for any calendar year as a credit
towards the requirements of this section in the following calendar
year or sell the associated RECs.
 Reduce energy consumption through “electricity demand reduction,”
which is a voluntary reduction in the demand of a retail customer
achieved by two-way communications devices that are under the real
time control of the customer and the electric public utility.5
Duke Energy Progress, LLC (DEP)
Compliance Report
On June 17, 2015, in Docket No. E-2, Sub 1071, DEP filed its 2014 REPS
compliance report and application for approval of its 2015 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2015: $1.17 per month for residential
customers; $6.65 per month for general service/lighting customers; and $60.77 per
month for industrial customers; each of which is below the incremental per-account
5 Sec. 1 of S.L. 2011-55 amended G.S. 62-133.8(a) by adding a definition of “electricity
demand reduction,” and Sec. 2 amended G.S. 62-133.8(b)(2) by adding a new subsection (g)
making electricity demand reduction a REPS resource, effective April 28, 2011.
39
cost cap established in G.S. 62-133.8(h). In its 2014 REPS compliance report,
DEP indicates that it acquired sufficient RECs to meet the 2014 requirement of 3%
of its 2013 retail sales (1,112,760 RECs representing 3% of combined 2013 retail
megawatt-hour sales). Additionally, DEP indicates that it acquired sufficient solar
RECs to meet the 2014 requirement of 0.07% of its 2013 retail sales
(25,969 RECs). DEP also indicates that, in combination with RECs eligible for the
poultry requirement pursuant to Session Law 2010-195 (S886), it was able to meet
the poultry waste set-aside requirement in 2014. Pursuant to the Commission’s
November 13, 2014 Order in Docket No. E-100, Sub 113, DEP’s 2014 swine waste
set-aside requirement was delayed until 2015. The Commission held a hearing on
DEP’s 2014 REPS compliance report and 2015 REPS cost recovery rider on
September 15, 2015. On November 17, 2015, the Commission issued an Order
Approving REPS and REPS EMF Rider and 2014 REPS Compliance. The Order
approved the following total REPS riders applicable to DEP for service rendered
on or after December 1, 2015: $1.17 per month for residential customers;
$6.66 per month for commercial customers; and $60.85 per month for industrial
customers. In addition, the Order approved DEP’s 2014 REPS compliance report
and retired the RECs and EECs associated with that account.
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2016: $1.31 per month for residential
customers; $10.78 per month for general service/lighting customers; and
$83.33 per month for industrial customers. DEP’s proposed rates for residential
customers and for general service/lighting customers are both below the
incremental per-account cost cap established in G.S. 62-133.8(h). However,
DEP’s proposed rate for industrial customers, on an annual basis is $999.96 per
customer account, as compared to the annual cost cap of $1,000.00 per customer
account. DEP’s proposed new REPS rider, if approved, will increase the current
REPS rates (excluding gross receipts taxes and regulatory fee) by $0.14 per month
for residential customers; by $4.12 per month for general service/lighting
customers; and by $22.48 per month for industrial customers. In its 2015 REPS
compliance report, DEP indicates that it acquired sufficient RECs to meet the 2015
requirement of 6% of its 2014 retail sales. Additionally, DEP indicates that it
acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its 2014
retail sales. DEP also indicates that it was able to meet the revised poultry waste
set-aside requirement in 2015. Pursuant to the Commission’s December 1, 2015
Order in Docket No. E-100, Sub 113, DEP’s 2015 swine waste set-aside
requirement was delayed until 2016. On September 20, 2016, the Commission
held a hearing on DEP’s 2015 REPS compliance report and 2016 REPS cost
recovery rider. A final decision is pending before the Commission.
40
Compliance Plan
On September 1, 2015, in Docket No. E-100, Sub 141, DEP filed its
2015 REPS compliance plan as part of its 2015 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; (2) purchases of RECs; (3) operations of company-owned
renewable facilities; and (4) research studies to enhance its ability to comply in
future years. On February 8, 2016, the Commission held a required public hearing
on DEP’s 2015 REPS compliance plan and 2015 IRP update report. On March 22,
2016, the Commission issued an Order Accepting Filing of 2015 Update Reports
and Approving 2015 REPS Compliance Plans accepting DEP’s IRP update and
REPS compliance plan. On February 8, 2016, the Commission held a required
public hearing on DEP’s 2015 REPS compliance plan and 2015 IRP update report.
On March 22, 2016, the Commission issued an Order Accepting Filing of 2015
Update Reports and Approving 2015 REPS Compliance Plans accepting DEP’s
IRP update and REPS compliance plan.
On September 1 2016, in Docket No. E-100, Sub 147, DEP filed its
2016 REPS compliance plan as part of its 2016 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) purchases
of RECs; (2) operations of company-owned renewable facilities; (3) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; and (4) research studies to enhance its ability to comply
in future years. DEP has agreed to provide REPS compliance services for the
following wholesale customers, as allowed under G.S. 62-133.8(c)(2)(e): the
towns of Black Creek, Lucama, Sharpsburg, Stantonsburg, and Winterville.
DEP states that it intends to fully satisfy and vastly exceed the minimum
solar set-aside requirements of 0.14% of the prior year’s retail sales in 2016 and
2017 and 0.20% of prior year’s retail sales in 2018 through purchase power
agreements, company-owned solar PV facilities, and REC purchases. Based on
its 2015 retail sales DEP’s 2016 solar set-aside requirement is approximately
52,605 RECs. Based on forecasted retail sales DEP’s solar set-aside requirement
is projected to be approximately 52,373 RECs in 2016 and 75,275 RECs in 2017.
DEP identifies three primary methods for compliance with the swine waste
set-aside requirement: (1) on-farm generation; (2) centralized digestion; and
(3) injected/directed biogas. DEP states that despite its active and diligent efforts,
it will be unable to comply with the requirement in 2016 and is highly uncertain of
its ability to comply in 2016 and 2017 due to multiple variables, particularly related
to counterparty achievement of projected delivery requirements and commercial
operation milestones. Therefore, DEP notes that it has joined other electric power
suppliers in a motion to delay the swine waste set-aside requirement by one year.
41
As to compliance with the poultry waste set-aside requirements, DEP states
that it continues to pursue various efforts to meet its compliance requirement,
including, (1) direct negotiations for additional supplies of both in-state and out-of-state
resources with multiple counterparties; (2) gaining an understanding of the
technological, permitting, and operational risks associated with various methods
to produce qualifying RECs; (3) exploring leveraging current biomass contracts by
working with developers to add poultry waste to their fuel mix; (4) exploring poultry
derived directed biogas at facilities in North Carolina for use at its combined cycle
plants; and (5) utilizing its REC trader to search for out-of-state poultry RECs
available in the market. DEP states that, in spite of these efforts, it has been unable
to secure enough RECs to comply with its share of the 2016 aggregate
poultry waste set-aside requirement (197,939 RECs) and that its ability
to achieve compliance with the requirements in 2017 (254,493 RECs) and 2018
(254,493 RECs) remains uncertain and largely subject to counterparty
performance.
DEP states that its general REPS requirement, net of the set-asides
discussed above, is estimated to be 1,977,517 RECs in 2016; 1,911,494 RECs in
2017 and 3,381,274 RECs in 2018. DEP notes several resource options available
to the Company to meet its general requirement, including, using the maximum
allowable use of EE savings (25%), hydroelectric power procured from suppliers
and from its wholesale customers SEPA allocations, and a variety of biomass, wind
and solar resources. DEP states that it purchases RECs from multiple biomass
facilities in the Carolinas, including landfill gas to energy facilities and biomass
fueled combined heat and power facilities. DEP states that it recognizes that some
land-based wind developers are presently pursuing projects of significant size in
North Carolina and that opportunities may exist to transmit land-based wind energy
resources into North Carolina from other regions. DEP plans to meet a portion of
the general requirement with RECs from solar facilities above that portion required
by the solar set-aside. DEP states it views the downward trend in solar equipment
and installation costs as a positive trend and that it expects solar resources to
contribute to compliance efforts beyond the solar set-aside minimum threshold.
Approval of DEP’s 2016 Compliance Plan is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, along with several
other parties, filed a motion to delay the requirements of the 2016 swine waste
set-aside and to modify the requirements of the poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Duke Energy Carolinas, LLC (DEC)
Compliance Report
On March 9, 2016, in Docket No. E-7, Sub 1106, as corrected by a filing on
March 15, 2016, DEC filed its 2015 REPS compliance report and an application
42
for approval of a REPS rider to be effective September 1, 2016. The application
requested a total REPS rider of $0.95 per month for residential customers;
$4.38 per month for general customers (the DEC equivalent of commercial class
customers); and $22.27 per month for industrial customers; each of which is below
the incremental per-account cost cap established in G.S. 62-133.8(h). In its
2015 REPS compliance report, DEC indicates that it acquired sufficient RECs to
meet the 2015 requirement of 6% of its 2014 retail sales. Additionally, DEC
indicates that it acquired sufficient solar RECs to meet the 2015 requirement of
0.14% of its 2014 retail sales and had acquired its pro-rata share of poultry RECs
to satisfy the 2015 poultry waste set-aside requirement. Pursuant to the
Commission’s December 1, 2015 Order in Docket No. E-100, Sub 113, DEC’s
2015 swine waste set-aside requirement was delayed until 2016. On March
9, 2016, the Commission held a hearing on DEC’s 2015 compliance report and
REPS cost recovery rider. On August 16, 2016, the Commission issued an order
approving DEC’s proposed REPS riders. In the same Order, the Commission
approved DEC’s 2015 compliance report and retired the RECs in DEC’s 2015
compliance sub account.
Compliance Plan
On September 1, 2015, in Docket No. E-100, Sub 141, DEC filed its
2015 REPS compliance plan as part of its 2015 Integrated Resource Plan (IRP)
update report. In its plan, DEC indicates that its overall compliance strategy to
meet the REPS requirements consisted of the following key components:
(1) energy efficiency programs that will generate savings that can be counted
towards obligation requirements; (2) purchases of RECs; (3) operations of
company-owned renewable facilities; and (4) research studies to enhance its
ability to comply in future years. On February 8, 2016, the Commission held a
required public hearing on DEC’s 2015 REPS compliance plan and 2015 IRP
update report. On March 22, 2016, the Commission issued an Order Accepting
Filing of 2015 Update Reports and Approving 2015 REPS Compliance Plans
accepting DEC’s IRP update and REPS compliance plan.
On September 1, 2016, in Docket No. E-100, Sub 147, DEC filed its
2016 REPS compliance plan as part of its 2016 IRP update report. In its plan, DEC
indicates that its overall compliance strategy to meet the REPS requirements
consisted of the following key components: (1) purchases of RECs; (2) operations
of company-owned renewable facilities; (3) energy efficiency programs that will
generate savings that can be counted towards obligation requirements; and
(4) research studies to enhance its ability to comply in future years. DEC has
agreed to provide REPS compliance services for the following wholesale
customers, as allowed under G.S. 62-133.8(c)(2)(e): Rutherford Electric
Membership Corporation, Blue Ridge Electric Membership Corporation, Town of
Dallas, Town of Forest City, City of Concord, Town of Highlands, and the City of
Kings Mountain.
43
DEC intends to achieve compliance with the solar set-aside requirement of
0.14% of the prior year’s retail sales in 2016 and 2017 and 0.20% of prior year’s
sales in 2018 through a combination of power purchase agreements and company
owned solar PV facilities. Based on its 2015 retail sales, DEC’s 2015 solar
set-aside requirement is approximately 85,835 RECs. Based on forecasted retail
sales DEC’s solar set-aside requirement is projected to be approximately
84,926 RECs in 2017 and 122,221 RECs in 2018.
DEC identifies three primary methods for compliance with the swine waste
set-aside requirement: (1) on-farm generation; (2) centralized digestion; and
(3) injected/directed biogas. DEC states that despite its efforts it will be unable to
comply with the requirement in 2016 and is highly uncertain of its ability to comply
in 2017 and 2018 due to multiple variables, particularly related to counterparty
achievement of projected delivery requirements and commercial operation
milestones. DEC notes that, due to its expected non-compliance in 2016, it has
submitted a motion to the Commission requesting a delay in the swine waste
set-aside compliance obligation for one year.
As for compliance with the poultry waste set-aside requirements, DEC
states in its compliance plan that it continues to pursue various efforts to meet its
compliance requirement, including, (1) direct negotiations for additional supplies
of both in-state and out-of-state resources with multiple counterparties; (2) gaining
an understanding of the technological, permitting, and operational risks associated
with various methods to produce qualifying RECs; (3) exploring leveraging current
biomass contracts by working with developers to add poultry waste to their fuel
mix; (4) exploring poultry derived directed biogas at facilities in North Carolina for
use at its combined cycle plants; and (5) utilizing its REC trader to search for out-of-
state poultry RECs available in the market. DEC further states that, in spite of
these efforts, it has been unable to secure enough RECs to comply with its share
of the 2016 aggregate poultry waste set-aside requirement (318,866 RECs) and
that its ability to achieve compliance with the requirements in 2017 (409,970 RECs)
and 2018 (409,970 RECs) remains uncertain and largely subject to counterparty
performance. DEC notes encouraging developments in its prospects for
compliance with the poultry waste set-aside requirements in a growing use of
thermal poultry RECs and DEC having recently signed a contract to purchase
poultry waste-derived directed biogas from a project in North Carolina that will be
used for fuel in DEC’s Dan River or Buck combined cycle plants. DEC notes that,
due to its expected non-compliance in 2016, it has submitted a motion to the
Commission requesting a delay in the swine waste set-aside compliance obligation
for one year.
DEC states that its general REPS requirement, net of the set-asides
discussed above, is estimated to be 3,230,850 RECs in 2016; 3,102,306 RECs in
2017; and 5,493,284 RECs in 2018. DEC notes several resource options available
to the Company to meet its general requirement. DEC states that it intends to meet
25% (the maximum allowable under the REPS) of its requirement through its
44
energy efficiency programs. In addition, DEC plans to use hydroelectric power
procured from suppliers and from its wholesale customers SEPA allocations.
Finally, DEC states that it intends to meet portions of its general requirement
through a variety of biomass, wind and solar resources. DEC states that it
purchases RECs from multiple biomass facilities in the Carolinas, including landfill
gas to energy facilities and biomass fueled combined heat and power facilities.
DEC states that it recognizes that some land-based wind developers are presently
pursuing projects of significant size in North Carolina. DEC also notes that
opportunities may exist to transmit land-based wind energy resources into North
Carolina form other regions. DEC plans to meet a portion of the general
requirement with RECs from solar facilities above that portion required by the solar
set-aside. DEC states it views the downward trend in solar equipment and
installation costs as a positive trend. Approval of DEC’s 2016 Compliance Plan is
pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEC, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Dominion North Carolina Power (Dominion)
Compliance Report
On August 19, 2015, in Docket No. E-22, Sub 525, Dominion filed an
application for approval of a 2015 REPS recovery rider and its 2015 compliance
report (for the 2014 compliance year). The report included compliance status for
the Town of Windsor. Dominion states that it met its 2014 general REPS
requirement (129,297 RECs) by purchasing unbundled out-of-state solar and wind
RECs, in-state solar RECs, and through energy efficiency measures and met the
Town of Windsor’s requirement (1,385 RECs) with additional biomass RECs from
within the State as well as the appropriate SEPA allocations. Dominion states that
it met its 2014 solar set-aside requirement (3,017 RECs) and the Town of
Windsor’s requirement (35 RECs) by purchasing solar RECs. Dominion states that
its 2014 swine waste set-aside requirement in G.S. 62-133.8(e) and (f) for itself
and the Town of Windsor was relieved pursuant to the Commission’s November
13, 2014 Order in Docket No. E-100, Sub 113. Dominion further states that it met
its 2015 poultry waste set-aside requirement in G.S. 62-133.8(f), for both itself
(5,630 RECs) and the Town of Windsor (64 RECs) and anticipates fulfillment of
the 2015 requirement for itself and the Town of Windsor. On December 16, 2015,
the Commission issued an Order Approving REPS and REPS EMF Riders and
2014 REPS Compliance. The Order approved the following total 2014 REPS
riders: $0.23 per month for residential customers; $0.99 per m

ANNUAL REPORT REGARDING
RENEWABLE ENERGY AND ENERGY EFFICIENCY
PORTFOLIO STANDARD IN NORTH CAROLINA
REQUIRED PURSUANT TO G.S. 62-133.8(j)
DATE DUE: OCTOBER 1, 2016
SUBMITTED: OCTOBER 1, 2016
RECEIVED BY
THE GOVERNOR OF NORTH CAROLINA
THE ENVIRONMENTAL REVIEW COMMISSION
AND THE JOINT LEGISLATIVE
COMMISSION ON GOVERNMENTAL OPERATIONS
SUBMITTED BY
THE NORTH CAROLINA UTILITIES COMMISSION
i
TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................... 1
BACKGROUND .................................................................................................. 17
2016 LEGISLATION ........................................................................................... 18
COMMISSION IMPLEMENTATION ................................................................... 18
North Carolina Renewable Energy Tracking System (NC-RETS) .............. 33
Environmental Impacts ............................................................................... 34
ELECTRIC POWER SUPPLIER COMPLIANCE ................................................ 35
Monitoring of Compliance with REPS Requirement ................................... 35
Cost Recovery Rider .................................................................................. 36
Electric Public Utilities ................................................................................ 37
EMCs and Municipally-Owned Electric Utilities .......................................... 46
RECOMMENDATION ......................................................................................... 58
CONCLUSIONS ................................................................................................. 59
ii
APPENDICES
1. Environmental Review
- Letter from Chairman Edward S. Finley, Jr., North Carolina
Utilities Commission, to Secretary Donald R. van der Vaart, North
Carolina Department of Environmental Quality (June 8, 2016)
- Letter from Secretary Donald R. van der Vaart, North Carolina
Department of Environmental Quality, to Chairman Edward
S. Finley, Jr., North Carolina Utilities Commission
(September 15, 2016)
2. Rulemaking Proceeding to Implement Session Law 2007-397
- Order Modifying the Swine and Poultry Waste Set-Aside
Requirements and Providing Other Relief, Docket No. E-100, Sub 113
(December 1, 2015)
- Order Establishing 2015 Poultry Waste Set-Aside Requirement
Allocation, Docket No. E-100, Sub 113 (December 15, 2015)
- Order Establishing Method of Allocating the Aggregate Poultry Waste
Resource Set-Aside Requirement, Docket No. E-100, Sub 113
(April 18, 2016)
- Order on NCSEA’s Request, Docket No. E-100, Sub 113
(June 6, 2016)
- Order Establishing the 2016, 2017, and 2018 Poultry Waste Set-Aside
Requirement Allocation, Docket No. E-100, Sub 113 (August 5, 2016)
3. Renewable Energy Facility Registrations
- Order Revoking Registration of Renewable Energy Facilities and
New Renewable Energy Facilities, Docket No. E-100, Sub 130
(December 2, 2015)
- Order Accepting Registration of New Renewable Energy Facilities,
Docket No. E-7, Subs 1086 and 1087 (March 11, 2016)
- Order Giving Notice of Intent to Revoke Registration of Renewable
Energy Facilities and New Renewable Energy Facilities,
Docket No. E-100, Sub 130 (August 25, 2016)
1
EXECUTIVE SUMMARY
In August 2007, North Carolina enacted comprehensive energy legislation,
Session Law 2007-397 (Senate Bill 3), which, among other things, established a
Renewable Energy and Energy Efficiency Portfolio Standard (REPS), the first
renewable energy portfolio standard in the Southeast. Under the REPS, all electric
power suppliers in North Carolina must meet an increasing amount of their retail
customers’ energy needs by a combination of renewable energy resources (such
as solar, wind, hydropower, geothermal and biomass) and reduced energy
consumption. Pursuant to G.S. 62-133.8(j), the Commission is required to report
by October 1 of each year to the Governor, the Environmental Review
Commission, and the Joint Legislative Commission on Governmental Operations
on the activities taken by the Commission to implement, and by electric power
suppliers to comply with, the REPS requirement.
2016 Legislation
The 2015-2016 General Assembly did not pass any legislation amending
the REPS.
Commission Implementation
Rulemaking Proceeding
Immediately after Senate Bill 3 was signed into law, the Commission
initiated a proceeding in Docket No. E-100, Sub 113, to adopt rules to implement
the REPS and other provisions of the new law. On February 29, 2008, the
Commission issued an Order adopting final rules implementing Senate Bill 3.
Since issuing this Order, the Commission has issued a number of orders
interpreting various REPS provisions, including the following Orders issued since
the 2015 report to the General Assembly:
 On December 1, 2015, in Docket No. E-100, Sub 113, the
Commission issued an Order Modifying the Swine and Poultry
Waste Set-Aside Requirements and Providing Other Relief. The
Order concluded that the electric suppliers made a
reasonable effort to comply with the REPS swine and poultry
waste set-aside requirements in 2015, but would not be able
to comply. The Order resulted in the following updated
2
compliance schedules for the swine waste and poultry waste
set-asides REPS requirements:
Calendar Year Requirement for Swine Waste Resources
2016-2017 0.07%
2018-2020 0.14%
2021 and thereafter 0.20%
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 MWh
2015 170,000 MWh
2016 700,000 MWh
2021 and thereafter 900,000 MWh
On August 11, 2016, in Docket No. E-100, Sub 113, electric
power suppliers filed a motion to delay the requirements of the
2016 swine waste set-aside and to modify the requirements
of the poultry waste set-aside. On August 31, 2016, the
Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
 On December 15, 2015, in Docket No. E-100, Sub 113, the
Commission issued an Order Establishing 2015 Poultry
Waste Set-Aside Requirement Allocation. The Order
established that the 2014 retail sales data reported to
NC-RETS by electric power suppliers and utility compliance
aggregators shall be used to allocate, on a pro-rata basis, the
170,000 MWh aggregate poultry waste set-aside requirement
for 2015.
 On April 18, 2016, in Docket No. E-100, Sub 113, the
Commission issued an Order Establishing Method of
Allocating the Aggregate Poultry Waste Resource Set-Aside
Requirement. The Order established that, starting with the
2016 compliance year, the aggregate poultry waste set-aside
obligation shall be allocated among the electric power
suppliers by averaging three years of historic retail sales
(2013, 2014, and 2015), with the resulting allocation held
constant for three years (2016, 2017, and 2018).
 On June 6, 2016, in Docket No. E-100, Sub 113, the
Commission issued an Order on NCSEA’s Request,
concluding that a topping cycle combined heat and power
system does not constitute an energy efficiency measure
under G.S. 62-133.8(a)(4), except to the extent that the
secondary component, the waste heat component, is used.
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 On August 5, 2016, in Docket No. E-100, Sub 113, the
Commission Issued an Order Establishing the 2016, 2017,
and 2018 Poultry Waste Set-Aside Requirement Allocation.
The Order established that the aggregate poultry waste set-aside
requirement for 2016, 2017, and 2018 shall be allocated
among the electric power suppliers and utility compliance
aggregators based on the load ratio share calculations shown
in the spreadsheet filed by the NC-RETS Administrator in
Docket No. E-100, Sub 113 on July 11, 2016 and the
methodology previously adopted by the Commission.
Renewable energy facilities
Senate Bill 3 defines certain electric generating facilities as “renewable energy
facilities” or “new renewable energy facilities.” Renewable energy certificates (RECs)
associated with electric or thermal power generated at such facilities may be used by
electric power suppliers to comply with the REPS requirement as provided in
G.S. 62-133.8(b) and (c).
In its rulemaking proceeding, the Commission adopted rules providing for
certification or report of proposed construction and registration of renewable
energy facilities and new renewable energy facilities. As of September 1, 2016, the
Commission has accepted registration statements filed by 1419 facilities. A list of
these facilities, along with other information, may be found on the Commission’s
website at: http://www.ncuc.net/reps/reps.htm.
Since the 2015 report, the Commission has issued a number of orders
addressing issues related to the registrations of a renewable energy facility or new
renewable energy facility, including the following:
 On December 2, 2015, the Commission issued an Order
revoking the registrations of 127 facilities registered with the
Commission as renewable energy facilities or as new
renewable energy facilities. The owners of the 127 facilities
did not complete their annual certifications on or before
October 15, 2015, as required by the Commission’s August
12, 2015 Order giving notice of intent to revoke registrations,
nor had an annual certification been completed for these
facilities as of the date of the Order. The Order states that
should the owner of a facility whose registration has been
revoked wish to have the energy output from its facility
become eligible for compliance with the REPS, the owner
must again register the facility with the Commission.
 On March 11, 2016, in Docket No. E-7, Subs 1086 and 1087,
the Commission issued an Order Accepting Registration of
New Renewable Energy Facilities accepting the registration
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of Duke Energy Carolina’s Buck and Dan River combined-cycle
generating facilities as new renewable energy facilities.
The facilities will be combusting directed biogas to generate
electricity for Duke Energy Carolina’s customers. The biogas
will be produced by anaerobic digestion of swine waste and
other biomass at facilities located in Missouri and Oklahoma,
cleaned to pipeline quality, metered, injected into the
interstate pipeline, and nominated for use by Duke Energy
Carolinas at Buck and Dan River. In previous orders, the
Commission concluded that biogas derived from the
anaerobic digestion of animal waste is a renewable energy
resource and that when such biogas is produced outside of
North Carolina, injected into the natural gas pipeline, and
nominated for use by a natural gas-fueled electric generating
facility, it is a renewable energy resource and the resulting
electric generation would be eligible to earn RECs that may
be used for REPS compliance, so long as appropriate
attestations are made and records kept to ensure that no
biogas is double-counted. Consistent with these past orders,
the Commission concluded that the registration statements for
the Buck and Dan River combined-cycle generating facilities
should be accepted. Further, the RECs associated with the
renewable energy generated at Buck and Dan River from
directed biogas will not be deemed out-of-State RECs subject
to the 25% limitation on the use for REPS compliance of
unbundled out-of-State RECs.
 On August 25, 2016, in Docket No. E-100, Sub 130, the
Commission issued an Order giving notice of its intent to
revoke the registrations of 26 renewable energy facilities and
215 new renewable energy facilities because their owners
had not completed or filed the annual certifications required
each April 1, as detailed in Commission Rule R8-66(b).
Facility owners were given until October 1, 2016, to file their
annual certifications belatedly. Owners that do not complete
the annual certifications face their facility’s registrations being
revoked pursuant to Commission Rule R8-66(f). The matter is
pending before the Commission.
North Carolina Renewable Energy Tracking System (NC-RETS)
Pursuant to G.S. 62-133.8(k), enacted in 2009, the Commission was
required to develop, implement, and maintain an online REC tracking system no
later than July 1, 2010, in order to verify the compliance of electric power suppliers
with the REPS requirements.
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On February 2, 2010, after evaluating the bids received in response to a
request for proposals (RFP), the Commission signed a Memorandum of
Agreement (MOA) with APX, Inc. (APX), to develop and administer an online REC
tracking system for North Carolina, NC-RETS. APX successfully launched
NC-RETS on July 1, 2010, and by letter dated September 3, 2010, the
Commission accepted the system and authorized APX to begin billing users
pursuant to the MOA. The original MOA with APX expired on December 31, 2013.
Based on the feedback received from the stakeholders, the Commission extended
the MOA with APX through December 31, 2017.
RECs have been successfully created by, and imported into, NC-RETS, and
the electric power suppliers have used the system to demonstrate compliance with
the 2010-2015 REPS solar set-aside requirements, the 2015 poultry waste set-aside
requirement, and the 2012-2015 REPS general requirements. Lastly, the
Commission has established an on-going NC-RETS stakeholder group, providing
a forum for resolution of issues and discussion of system improvements.
Environmental impacts
Pursuant to G.S. 62-133.8(j), the Commission was directed to consult with
the North Carolina Department of Environmental Quality (DEQ) in preparing its
report and to include any public comments received regarding direct, secondary,
and cumulative environmental impacts of the implementation of the REPS
requirements of Senate Bill 3. The Commission has not identified, nor has it
received from the public or DEQ, any public comments regarding direct,
secondary, and cumulative environmental impacts of the implementation of the
REPS provision of Senate Bill 3. DEQ, in response to the Commission’s request,
notes impacts on North Carolina’s air, water and land quality. DEQ’s full response
is attached to this report as part of Appendix 1.
Electric Power Supplier Compliance
The REPS requires electric power suppliers, beginning in 2012, to meet an
increasing percentage of their retail customers’ energy needs by a combination of
renewable energy resources and energy reductions from the implementation of
energy efficiency (EE) and demand-side management (DSM) measures. In
addition, as of 2010, each electric power supplier must meet a certain percentage
of its retail electric sales with solar RECs from certain solar facilities. Finally,
starting in 2012, each electric power supplier must meet a certain percentage of
its retail electric sales from swine waste resources and a specified amount of
electricity provided must be derived from poultry waste resources.
Monitoring compliance with REPS requirements
Monitoring by the Commission of compliance with the REPS requirements
of Senate Bill 3 is accomplished through the annual filing by each electric power
supplier of a REPS compliance plan and a REPS compliance report. Pursuant to
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Commission Rule R8-67(b), on or before September 1 of each year, each electric
power supplier is required to file with the Commission a REPS compliance plan
providing specific information regarding its plan for complying with the REPS
requirement of Senate Bill 3. Pursuant to Commission Rule R8-67(c), each electric
power supplier is required to annually file with the Commission a REPS compliance
report. The REPS compliance plan is a forward-looking forecast of an electric
power supplier’s REPS requirement and its plan for meeting that requirement. The
REPS compliance report is an annual look back at the RECs earned or purchased
and energy savings actually realized during the prior calendar year, and the electric
power supplier’s compliance in meeting its REPS requirement.
Cost recovery rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider up to an annual cap to recover the incremental costs incurred to
comply with the REPS requirement and to fund certain research. Commission
Rule R8-67(e) establishes a procedure under which the Commission will consider
approval of a REPS rider for each electric public utility. The REPS rider operates
in a manner similar to that employed in connection with the fuel charge adjustment
rider authorized in G.S. 62-133.2 and is subject to an annual true-up.
Electric public utilities
Duke Energy Progress, LLC (DEP)
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2016: $1.31 per month for residential
customers; $10.78 per month for general service/lighting customers; and
$83.33 per month for industrial customers. DEP’s proposed rates for residential
customers and for general service/lighting customers are both below the
incremental per-account cost cap established in G.S. 62-133.8(h). However,
DEP’s proposed rate for industrial customers, on an annual basis is $999.96 per
customer account, as compared to the annual cost cap of $1,000.00 per customer
account. In its report, DEP indicates that it acquired sufficient RECs to meet the
2015 requirement of 6% of its 2014 retail sales. Additionally, DEP indicates that it
acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its 2014
retail sales. DEP also indicates that it was able to meet the revised poultry waste
set-aside requirement in 2015. Pursuant to the Commission’s December 1, 2015
Order in Docket No. E-100, Sub 113, DEP’s 2015 swine waste set-aside
requirement was delayed until 2016. A hearing was held on DEP’s 2015 REPS
compliance report and 2016 REPS cost recovery rider on September 20, 2016. A
final decision is pending before the Commission.
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On September 1 2016, in Docket No. E-100, Sub 147, DEP filed its
2016 REPS compliance plan as part of its 2016 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) purchases
of RECs; (2) operations of company-owned renewable facilities; (3) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; and (4) research studies to enhance its ability to comply
in future years. DEP states that it intends to fully satisfy and vastly exceed the
minimum solar set-aside requirements of 0.14% of the prior year’s retail sales in
2016 and 2017 and 0.20% of prior year’s retail sales in 2018 through purchase
power agreements, company-owned solar PV facilities, and REC purchases. DEP
identifies three primary methods for compliance with the swine waste set-aside
requirement and states that despite its active and diligent efforts, it will be unable
to comply with the requirement in 2016 and is highly uncertain of its ability to
comply in 2017 and 2018 due to multiple variables, particularly related to
counterparty achievement of projected delivery requirements and commercial
operation milestones. As to compliance with the poultry waste set-aside
requirements, DEP states that it continues to pursue various efforts to meet its
compliance requirement. DEP states that, in spite of these efforts, it has been
unable to secure enough RECs to comply with its share of the 2016 aggregate
poultry waste set-aside requirement and that its ability to achieve compliance with
the requirements in 2017 and 2018 remains uncertain and largely subject to
counterparty performance. DEP notes several resource options available to the
Company to meet its general requirement. DEP states it views the downward trend
in solar equipment and installation costs as a positive trend and that it expects
solar resources to contribute to compliance efforts beyond the solar set-aside
minimum threshold. Approval of DEP’s 2016 compliance plan is pending before
the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, along with several
other parties, filed a motion to delay the requirements of the 2016 swine waste set-aside
and to modify the requirements of the poultry waste set-aside. On August
31, 2016, the Commission issued an Order Requesting Comments on the motion.
The matter is pending before the Commission.
Duke Energy Carolinas, LLC (DEC)
On March 9, 2016, in Docket No. E-7, Sub 1106, as corrected by a filing on
March 15, 2016, DEC filed its 2015 REPS compliance report and an application
for approval of a REPS rider to be effective September 1, 2016. The application
requested a total REPS rider of $0.95 per month for residential customers; $4.38
per month for general customers (the DEC equivalent of commercial class
customers); and $22.27 per month for industrial customers–each of which is below
the incremental per-account cost cap established in G.S. 62-133.8(h). In its 2015
REPS compliance report, DEC indicates that it acquired sufficient RECs to meet
the 2015 requirement of 6% of its 2014 retail sales. Additionally, DEC indicates
that it acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its
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2014 retail sales and had acquired its pro-rata share of poultry RECs to satisfy the
2015 poultry waste set-aside requirement. Pursuant to the Commission’s
December 1, 2015 Order in Docket No. E-100, Sub 113, DEC’s 2015 swine waste
set-aside requirement was delayed until 2016. On March 9, 2016, the Commission
held a hearing on DEC’s 2015 compliance report and REPS cost recovery rider.
On August 16, 2016, the Commission issued an order approving DEC’s proposed
REPS riders. In the same Order, the Commission approved DEC’s 2015
compliance report and retired the RECs in DEC’s 2015 compliance sub account.
Additionally, in the same Order, the Commission notes several specific concerns
regarding DEC’s charging of interconnection costs to the REPS rider and required
DEC to address these concerns in future proceedings.
On September 1, 2016, in Docket No. E-100, Sub 147, DEC filed its 2016
REPS compliance plan as part of its 2016 IRP update report. In its plan, DEC
indicates that its overall compliance strategy to meet the REPS requirements
consisted of the following key components: (1) purchases of RECs; (2) operations
of company-owned renewable facilities; (3) energy efficiency programs that will
generate savings that can be counted towards obligation requirements; and
(4) research studies to enhance its ability to comply in future years. DEC intends
to achieve compliance with the solar set-aside requirement of 0.14% of the prior
year’s retail sales in 2016 and 2017 and 0.20% of prior year’s sales in 2018 through
a combination of power purchase agreements and company owned solar PV
facilities. DEC identifies three primary methods for compliance with the swine
waste set-aside requirement, but states that despite its efforts it will be unable to
comply with the requirement in 2016 and is highly uncertain of its ability to comply
in 2017 and 2018 due to multiple variables, particularly related to counterparty
achievement of projected delivery requirements and commercial operation
milestones. As for compliance with the poultry waste set-aside requirements, DEC
states in its compliance plan that it continues to pursue various efforts to meet its
compliance requirement, but in spite of these efforts, it has been unable to secure
enough RECs to comply with its share of the 2016 aggregate poultry waste set-aside
requirement and that its ability to achieve compliance with the requirements
in 2017 and 2018 remains uncertain and largely subject to counterparty
performance. DEC notes encouraging developments in its prospects for
compliance with the poultry waste set-aside requirements in a growing use of
thermal poultry RECs and DEC having recently signed a contract to purchase
poultry waste-derived directed biogas from a project in North Carolina that will be
used for fuel in DEC’s Dan River or Buck combined-cycle plants. DEC notes
several resource options available to the Company to meet its general
requirement, including meeting 25% (the maximum allowable under the REPS) of
its requirement through its energy efficiency programs, hydroelectric power
procured from suppliers and from its wholesale customers SEPA allocations, and
through a variety of biomass, wind and solar resources. DEC plans to meet a
portion of the general requirement with RECs from solar facilities above that
portion required by the solar set-aside. DEC states it views the downward trend in
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solar equipment and installation costs as a positive trend. Approval of DEC’s
2016 Compliance Plan is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEC, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. On
August 31, 2016, the Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
Dominion North Carolina Power (Dominion)
On August 19, 2015, in Docket No. E-22, Sub 525, Dominion filed an
application for approval of a 2015 REPS recovery rider and its 2015 compliance
report (for the 2014 compliance year). The report included compliance status for
the Town of Windsor. Dominion states that it met its 2014 general REPS
requirement by purchasing unbundled out-of-state solar and wind RECs, in-state
solar RECs, and through energy efficiency measures and met the Town of
Windsor’s requirement with additional biomass RECs from within the State as well
as the appropriate SEPA allocations. Dominion states that it met its 2014 solar set-aside
requirement and the Town of Windsor’s requirement by purchasing solar
RECs. Dominion states that its 2014 swine waste set-aside requirement in
G.S. 62-133.8(e) and (f) for itself and the Town of Windsor was relieved pursuant
to the Commission’s November 13, 2014 Order in Docket No. E-100, Sub 113.
Dominion further states that it met its 2015 poultry waste set-aside requirement in
G.S. 62-133.8(f), for both itself and the Town of Windsor and anticipates fulfillment
of the 2015 requirement for itself and the Town of Windsor. On December 16,
2015, the Commission issued an Order Approving REPS and REPS EMF Riders
and 2014 REPS Compliance. The Order approved the following total 2014 REPS
riders: $0.23 per month for residential customers; $0.99 per month for commercial
customers; and $6.70 per month for industrial customers. In addition, the Order
approved Dominion’s 2015 REPS compliance report and retired the RECs and
EECs associated with that account.
On April 29, 2016, in Docket No. E-100, Sub 147, Dominion filed its 2016
REPS compliance plan as part of its 2016 IRP update report. Dominion states that
it intends to meet its general REPS requirements in 2016 through 2018 through
the use of RECs, EE, and new company-generated renewable energy where
economically feasible. Dominion also detailed its efforts to comply with the REPS
set-aside requirements. Through those efforts, Dominion states that it currently
has, or has contracts to purchase, sufficient RECs to satisfy the solar, swine waste,
and poultry waste set-aside requirements. However, Dominion notes that there is
some uncertainty around swine waste compliance due to the fact that its single
supply source is under construction and has not yet reached commercial
operation. The matter is pending before the Commission.
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On August 11, 2016, in Docket No. E-100, Sub 113, Dominion, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. On
August 31, 2016, the Commission issued an Order Requesting Comments on the
motion. The matter is pending before the Commission.
EMCs and municipally-owned electric utilities
There are thirty-one EMCs serving customers in North Carolina, including
twenty-six that are headquartered in the state. Twenty-five of the EMCs are
members of North Carolina EMC (NCEMC), a generation and transmission (G&T)
services cooperative that provides wholesale power and other services to its
members. In addition, there are seventy-four municipal and university-owned
electric distribution systems serving customers in North Carolina. Fifty-one of the
North Carolina municipalities are participants in either North Carolina Eastern
Municipal Power Agency (NCEMPA), or North Carolina Municipal Power Agency
Number 1 (NCMPA1), municipal power agencies that provide wholesale power to
their members. The remaining municipally-owned electric utilities purchase their
electric power from wholesale electric suppliers.
By Orders issued August 27, 2008, the Commission allowed twenty-two
EMCs to file their REPS compliance plans on an aggregated basis through
GreenCo Solutions, Inc., and the fifty-one municipal members of the power
agencies to file through NCEMPA and NCMPA1.
GreenCo Solutions, Inc. (GreenCo)
On September 1, 2016, in Docket No. E-100, Sub 149, GreenCo filed with
the Commission its 2015 REPS compliance report and its 2016 compliance plan.
In its plan, GreenCo states that it intends to use its members’ allocations from SEPA,
RECs purchased from both in-state and out-of-state renewable energy facilities, and
EE savings from eleven approved EE programs to meet its members’ REPS
requirements. GreenCo states that it has joined other electric power suppliers to
request a delay to the 2016 poultry and swine waste set-aside requirements, noting
that the prospect of complying in 2017 is more likely than 2016. In its 2015 REPS
compliance report, GreenCo states that, in 2015, its member cooperatives as well
as Broad River and Mecklenburg EMCs fully met the general REPS requirement.
GreenCo states it secured adequate resources to meet its members’ solar set-aside
requirement for 2015 (18,177 RECs for GreenCo, 3 RECs for Mecklenburg, and
9 RECs for Broad River) and to meet its members’ poultry waste set-aside
requirement for 2015 (16,577 RECs for GreenCo, 3 RECs for Mecklenburg, and
8 RECs for Broad River). GreenCo also states that it secured adequate resources
to meet its members’ general REPS requirement for 2015 (779,006 RECs for
GreenCo, 105 RECs for Mecklenburg, and 353 RECs for Broad River). GreenCo
notes that the Commission delayed its swine waste set-aside requirements until
2016. Lastly, for 2015, the REPS incremental costs incurred by GreenCo’s members
were less (around one-tenth) of the costs allowed under the per-account cost cap in
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G.S. 62-133.8(h). Approval of GreenCo’s 2016 compliance plan and 2015
compliance report is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, GreenCo, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
EnergyUnited Electric Membership Corporation (EnergyUnited)
On August 31, 2016, in Docket No. E-100, Sub 149, EnergyUnited filed its
2015 REPS compliance report with the Commission and on September 6, 2016 in
the same docket, EnergyUnited filed its compliance plan. In its report,
EnergyUnited states that it met its 2015 general REPS requirement, its solar set-aside
requirement, and its poultry waste set-aside requirement. In its plan,
EnergyUnited states that it intends to comply with its future obligations through its
SEPA allocations, EE programs, and the purchase of RECs and renewable
energy. On August 11, 2016, in Docket No. E-100, Sub 113, EnergyUnited, along
with several other parties, filed a motion to delay the requirements of the 2016
swine waste set-aside and to modify the requirements of poultry waste set-aside.
The Commission has requested comments on the matter and it is pending before
the Commission.
Tennessee Valley Authority (TVA)
On September 1, 2016, TVA filed its 2016 REPS compliance plan and 2015
REPS compliance report with the Commission. In its plan, TVA indicates its intent
to fulfill the general REPS requirement in 2016 through 2018 with its SEPA
allocations, purchase of out-of-state wind RECs, and the purchases of various
in-state RECs. With regard to its cooperatives’ solar set-aside requirements, TVA
reiterates its plans to meet the requirement by generating the energy at its own
facilities. TVA states that it is making reasonable efforts to procure potential and
available swine RECs, but it believes that there are not sufficient amounts of such
energy and RECs available to meet the 2016 swine waste set-aside requirements.
TVA states that it is making reasonable efforts to procure energy and RECs from
available poultry waste resources, including generating electricity at its own facility
and other permitted resources, to meet the REPS poultry waste set-aside
requirements. In its report, TVA states it had satisfied its cooperatives’ 2015
general REPS requirement with its SEPA allocations, purchase of out-of-state wind
RECs, and the purchases of various in-state RECs and had satisfied its
cooperatives’ 2015 solar set-aside requirement through the generation of solar
energy. TVA notes that it was relieved of its 2015 swine waste set-aside
requirements and fulfilled its 2015 poultry waste set-aside requirement. TVA states
that it had no incremental costs of compliance (TVA’s estimated cost cap is
$1,763,934). On August 11, 2016, in Docket No. E-100, Sub 113, TVA, along with
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several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Halifax Electric Membership Corporation (Halifax)
On September 1, 2016 in Docket No. E-100, Sub 147, Halifax filed with the
Commission its 2016 compliance plan and 2015 compliance report. In its
compliance plan, Halifax states that it intends to meet its REPS requirements with
a combination of SEPA allocations, EE programs, various RECs, and additional
resources to be determined on an ongoing basis. Halifax notes concerns regarding
the addition of industrial customers and its cost cap in future years. With regard to
its 2014 solar set-aside requirement, Halifax met the requirement by generating
solar energy and purchasing solar RECs. With regard to its 2014 poultry waste
set-aside requirement, Halifax met the requirement by purchasing poultry RECs.
Halifax’s (and the other electric power suppliers’) swine waste set-aside
requirement was delayed until 2016 pursuant to the Commission’s December 1,
2015 Order in Docket No. E-100, Sub 113. On August 11, 2016, in Docket
No. E-100, Sub 113, Halifax, along with several other parties, filed a motion to
delay the requirements of the 2016 swine waste set-aside and to modify the
requirements of poultry waste set-aside. The Commission has requested
comments on the matter and it is pending before the Commission.
North Carolina Eastern Municipal Power Agency (NCEMPA)
On September 1, 2016, in Docket No. E-100, Sub 149, NCEMPA filed with
the Commission, on behalf of its members, its 2016 REPS compliance plan and
2015 REPS compliance report. In its 2016 compliance plan, NCEMPA states that
its members have no plans to generate electric power at a renewable energy
facility. NCEMPA states that its members would meet their REPS requirements by
purchasing RECs and SEPA allocations. NCEMPA states that it will continue to
implement its current EE programs, but it will no longer use EE as a method of
REPS compliance, citing the costs of M&V, the low number of RECs actually
produced, and the availability of other REPS compliance methods. NCEMPA
states that it has entered into contracts to purchase various types of RECs and will
continue to investigate the market for unbundled RECs as a cost-effective means
of REPS compliance. NCEMPA further states that it has entered into contracts for
enough RECs to satisfy the solar set-aside requirement through 2018. NCEMPA
has also entered into agreements to secure NCEMPA’s pro rata share of the
statewide aggregate of the poultry waste set-aside requirement through 2017, but
has joined the joint motion to delay the requirement because the aggregate goal
will not be met. NCEMPA cites a number of challenges in securing swine waste
RECs and states that it is not in a position to meet the 2016 swine waste
requirements. In its compliance report, NCEMPA states that it met its 2015 general
REPS requirement (427,085 RECs) through the purchase of bundled renewable
energy from hydro generation sources and the purchase of solar, biomass, and
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poultry RECs. Additionally, NCEMPA states in its report that it met its 2015 solar
set-aside requirement (9,966 RECs) by purchasing solar RECs and its 2015
poultry waste set-aside requirement (9,089 RECs) by purchasing poultry RECs
and RECs available under S.L. 2011-279 (Senate Bill 886). NCEMPA shows in its
report that its 2015 actual incremental compliance costs were well below the
per-account cost cap and estimated in its compliance plan that the incremental
costs for REPS compliance will be significantly less than its per-account cost cap
in 2015 through 2017. Approval of NCEMPA’s 2016 REPS compliance plan and
2015 REPS compliance report is pending before the Commission. On August 11,
2016, in Docket No. E-100, Sub 113, NCEMPA, along with several other parties,
filed a motion to delay the requirements of the 2016 swine waste set-aside and to
modify the requirements of poultry waste set-aside. The Commission has
requested comments on the matter and it is pending before the Commission.
North Carolina Municipal Power Agency No. 1 (NCMPA1)
On August 31, 2016, NCMPA1 filed with the Commission, on behalf of its
members, its 2016 REPS compliance plan and 2015 REPS compliance report. In
its plan, NCMPA1 states that it intends to investigate and develop, as applicable,
new renewable energy facilities. NCMPA1 states that its members would meet
their REPS requirements by purchasing RECs, as well as utilizing SEPA
allocations. NCMPA1 states that it will continue to implement its current EE
programs, but it will no longer use EE as a method of REPS compliance, citing the
costs of M&V, the low number of RECs actually produced, and the availability of
other REPS compliance methods. NCMPA1 states that it had entered into
contracts to purchase various types of RECs and would continue to investigate the
market for unbundled RECs as a cost-effective means of REPS compliance. In its
compliance plan, NCMPA1 states that it had entered into contracts for enough
RECs to satisfy the solar set-aside requirement through 2018. In its compliance
report, NCMPA1 states that it met its 2015 general REPS requirement (297,968
RECs) by purchasing renewable energy from solar generation resources purchase
of bundled renewable energy from hydroelectric generation resources, and
through the purchase of solar, biomass, hydroelectric and poultry RECs.
Additionally, NCMPA1 states that it met its 2015 solar set-aside requirement by
purchasing electricity from solar generating facilities and through the purchase of
solar RECs, and met its 2015 poultry set-aside requirement through the purchase
of RECs. NCMPA1 states that its 2015 incremental costs were about one-sixth of
the per-account cost cap and estimated in its compliance plan that the incremental
costs for REPS compliance will be significantly less than its per-account cost cap
in 2016 through 2018. Approval of NCMPA1’s 2016 REPS compliance plan and
2015 REPS compliance report is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, NCMPA1, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
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Fayetteville Public Works Commission (FPWC)
On September 1, 2016, in Docket No. E-100, Sub 113, FPWC filed its
2015 compliance report and 2016 compliance plan. In its 2016 compliance plan,
FPWC states that it intends to meet its REPS requirements by purchasing RECs,
as well as utilizing SEPA allocations and EE and DSM programs. Finally, FPWC
states that its incremental costs for REPS compliance are projected to be less than
its per-account cost cap in 2016 through 2018. In its compliance report, FPWC
states that it met its 2015 general REPS requirement (125,268 RECs) through the
purchase of in-state and out-of-state RECs. Additionally, FPWC states that it met
its solar set-aside requirement through the purchase of 2,923 solar RECs and its
poultry waste set-aside requirement through the purchase of 2,666 poultry RECs.
Approval of FPWC’s 2015 compliance report and 2016 compliance plan is pending
before the Commission. On August 11, 2016, in Docket No. E-100, Sub 113,
FPWC, along with several other parties, filed a motion to delay the requirements
of the 2016 swine waste set-aside and to modify the requirements of poultry waste
set-aside. The Commission has requested comments on the matter and it is
pending before the Commission.
Town of Fountain (Fountain)
On August 23, 2016, in Docket No. E-100, Sub 149, Fountain filed its 2016
compliance plan and 2015 compliance report. Fountain notes in its compliance
plan that compliance for 2016 through 2018 would be satisfied through the
purchase of RECs. In its compliance report, Fountain states that its 2015 general
REPS requirement was 187 RECs. Fountain additionally notes that its solar set-aside
requirement was 5 solar RECs and its poultry waste set-aside requirement
was 18 RECs, all of which were satisfied through the purchase of RECs. Further,
Fountain notes that its incremental costs were 30% of the allowed per-account cost
cap. Approval of Fountain’s 2015 compliance report and its 2016 compliance plan
is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, Fountain, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of the 2016 poultry waste set-aside.
The Commission has requested comments on the matter and it is pending
before the Commission.
Town of Waynesville (Waynesville)
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. In its report, DEP states that it
provided REPS compliance for Waynesville for 2015 and that DEP met the REPS
requirements for its wholesale power customers, including Waynesville. On
September 12, 2016, in Docket No. E-100, Sub 149, Waynesville filed its 2016
compliance plan. In its plan, Waynesville states that, beginning in 2016,
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Waynesville will be responsible for its own REPS compliance. Waynesville further
states that the key components of its compliance plan include purchases of RECs,
SEPA RECs up to 30% of the requirement, and energy efficiency programs.
Waynesville expects to fully exceed the minimum solar set-aside requirements
during 2016-2018 compliance years but notes that meeting the swine and poultry
waste set-aside requirements during that period will be challenging. Waynesville
states that it is well positioned to meet the general REPS requirements during
2016-2018 compliance years.
Wholesale Providers Meeting REPS Requirements
DEP, as the wholesale provider, has agreed to meet the REPS
requirements for the towns of Black Creek, Lucama, Sharpsburg, Stantonsburg,
and Winterville.1 Similarly, DEC has agreed to meet the REPS requirements for
Rutherford EMC; Blue Ridge EMC; the cities of Concord and Kings Mountain; and
the towns of Dallas, Forest City, and Highlands. Dominion has agreed to meet the
REPS requirements for the Town of Windsor. The towns of Macclesfield, Pinetops,
and Walstonburg have previously filed letters stating that the City of Wilson, as
their wholesale provider, has agreed to include their loads with its own for reporting
to NCEMPA for REPS compliance. Oak City has indicated that Edgecombe-Martin
County EMC, its wholesale provider, has agreed to include its loads with its own
for reporting to GreenCo for REPS compliance.
Recommendation
On September 18, 2015, the Governor signed into law House
Bill 97/Session Law 2015-241 (2015 Budget). Section 15.16A of the 2015 Budget
directs the Utilities Commission and the Public Staff to jointly review all fees and
charges provided for in G.S. 62-300 to determine 1) whether the fees and charges
are sufficient to cover the costs of processing the applications and filings required
by G.S. 62-300 and 2) whether new categories should be established to impose
fees or charges on persons or entities who make applications or filings to the
Commission, but are not expressly included in any of the current categories of fees
and charges listed in G.S. 62-300.
On March 29, 2016, the Commission and Public Staff submitted a report
pursuant to Section 15.16A of the 2015 Budget. As discussed in detail below, the
report states that the current fees are not sufficient to cover the Commission’s
administrative costs associated with processing filings. The report includes three
recommendations, two of which are relevant to the Commission’s implementation
of the REPS:
1 On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS compliance
report and application for approval of its 2016 REPS cost recovery rider. In its report, DEP states
its contract as wholesale power provider and for providing REPS compliance services for
Waynesville expired on December 31, 2015.
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1. That the General Assembly consider adding new categories of fees
allowed under G.S. 62-300 to defray processing costs for renewable
energy registration statements, reports of proposed construction,
and CPCN applications by non-utility generators; and
2. That the General Assembly consider expanding the Commission’s
authority under G.S. 62-71(d) to allow the Commission to recover all
direct hearing costs from non-utility entities not subject to the
regulatory fee.
Legislation amending G.S. 62-300 was not enacted in 2016. The Commission
recommends that the General Assembly consider the recommendations contained in the
March 29, 2016 report pursuant to Section 15.16A of the 2015 Budget during the 2016
legislative session.
Conclusions
All of the electric power suppliers have met or appear to have met the
2012-2015 general REPS requirement and appear on track to meet the 2016
general REPS requirements. All of the electric power suppliers have met the
2012-2015 solar set-aside requirements and appear to be on track to meet the
2016 solar set-aside requirement. The Commission granted a joint motion to delay
implementation of the 2015 swine waste set-aside requirement, delaying
implementation of that section of the REPS by one additional year. In addition, the
electric power suppliers appear to have met the poultry waste set-aside
requirement in 2015. Despite this, most electric power suppliers do not appear on
track to meet the swine and poultry waste set-aside requirements for 2016 and
have requested further delays to both of these requirements. The electric power
suppliers requested a delay in the requirements of the 2016 swine waste set-aside
and a modification of the requirements of the poultry waste set-aside to keep that
requirement at the same level as the 2015 requirement. The matter is pending
before the Commission. In addition, numerous issues continue to arise in the
implementation of the REPS statute that have required interpretation by the
Commission of the statutory language. If the plain language of the statute was
ambiguous, the Commission attempted to discern the intent of the General
Assembly in reaching its decision on the proper interpretation of the statute.
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BACKGROUND
In August 2007, North Carolina enacted comprehensive energy legislation, Session
Law 2007-397 (Senate Bill 3), which, among other things, established a Renewable Energy
and Energy Efficiency Portfolio Standard (REPS), the first renewable energy portfolio
standard in the Southeast. Under the REPS, all electric power suppliers in North Carolina
must meet an increasing amount of their retail customers’ energy needs by a combination
of renewable energy resources (such as solar, wind, hydropower, geothermal and biomass)
and reduced energy consumption. Beginning at 3% of retail electricity sales in 2012, the
REPS requirement ultimately increases to 10% of retail sales beginning in 2018 for the
State’s EMCs and municipally-owned electric providers and 12.5% of retail sales beginning
in 2021 for the State’s electric public utilities.
In G.S. 62-133.8(j), the General Assembly required the Commission to make the
following annual report:
No later than October 1 of each year, the Commission shall submit a
report on the activities taken by the Commission to implement, and by
electric power suppliers to comply with, the requirements of this
section to the Governor, the Environmental Review Commission, and
the Joint Legislative Commission on Governmental Operations. The
report shall include any public comments received regarding direct,
secondary, and cumulative environmental impacts of the
implementation of the requirements of this section. In developing the
report, the Commission shall consult with the Department of
Environment and Natural Resources.2
On October 1, 2008, the Commission made its first annual report pursuant to
G.S. 62-133.8(j),3 and last year, on October 1, 2015, the Commission made its eighth
annual report.4 The remaining sections of this report detail, as required by the General
Assembly, developments related to Senate Bill 3, activities undertaken by the
Commission during the past year to implement Senate Bill 3, and actions by the electric
power suppliers to comply with G.S. 62-133.8, the REPS provisions of Senate Bill 3.
2 G.S. 62-133.8(j) was amended by Session Law 2011-291 to require that the annual REPS Report
be submitted to the Joint Legislative Commission on Governmental Operations, rather than the Joint
Legislative Utility Review Committee.
3 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding Energy
and EE Portfolio Standard, October 1, 2008 (2008 REPS Report).
4 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding Energy
and EE Portfolio Standard, October 1, 2015 (2015 REPS Report).
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2016 LEGISLATION
The 2016 General Assembly did not pass any legislation amending the
REPS.
COMMISSION IMPLEMENTATION
Rulemaking Proceeding
As detailed in the Commission’s 2008 REPS Report, after Senate Bill 3 was
signed into law the Commission initiated a proceeding in Docket No. E-100, Sub
113, to adopt rules to implement the REPS and other provisions of the new law.
On February 29, 2008, the Commission issued an Order adopting final rules
implementing Senate Bill 3. The rules, in part, require each electric power supplier
to file an annual REPS compliance plan and an annual REPS compliance report
to demonstrate, respectively, reasonable plans for, and actual compliance with,
the REPS requirement.
In its 2015 REPS Report, the Commission notes that it had issued a number
of orders interpreting various provisions of the REPS statute, in which it made the
following conclusions:
 Tennessee Valley Authority’s (TVA) distributors making retail sales in North
Carolina and electric membership corporations (EMCs) headquartered outside
of North Carolina that serve retail electric customers within the State must
comply with the REPS requirement of Senate Bill 3, but the university-owned
electric suppliers, Western Carolina University and New River Light & Power
Company, are not subject to the REPS requirement.
 Each electric power supplier’s REPS requirement, both the set-aside
requirements and the overall REPS requirements, should be based on its prior
year’s actual North Carolina retail sales.
 An electric public utility cannot use existing utility-owned hydroelectric
generation for REPS compliance, but may use power generated from new
small (10 MW or less) increments of utility-owned hydroelectric generating
capacity.
 The solar, swine waste and poultry waste set-aside requirements should have
priority over the general REPS requirement where both cannot be met without
exceeding the per-account cost cap established in G.S. 62-133.8(h).
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 The set-aside requirements may be met through the generation of power,
purchase of power, or purchase of unbundled renewable energy credits
(RECs).
 The 25% limitation on the use of out-of-state RECs applies to the general REPS
requirement and each of the individual set-aside provisions.
 The electric power suppliers are charged with collectively meeting the
aggregate swine waste and poultry waste set-aside requirements and may
agree among themselves how to collectively satisfy those requirements.
 RECs associated with the electric power generated at a biomass-fueled
combined heat and power (CHP) facility located in South Carolina and
purchased by an electric public utility in North Carolina would be considered as
in-state pursuant to G.S. 62-133.8(b)(2)(d), but RECs associated with out-of-state
renewable generation not delivered to and purchased by an electric
public utility in North Carolina and RECs associated with out-of-state
thermal energy would not be considered to be in-state RECs pursuant to
G.S. 62-133.8(b)(2)(d).
 Only RECs associated with the percentage of electric generation that results
from methane gas that was actually produced by poultry waste or swine waste
may be credited toward meeting the swine waste and poultry waste set-aside
requirements. Thus, not all of the methane gas produced by the anaerobic
digestion of swine or poultry waste, as well as “other organic biodegradable
material,” would qualify toward the set-aside requirements because the other
material described as mixed with the poultry waste or swine waste is
responsible for some percentage of the resulting methane gas.
 Issuance of a joint request for proposals (RFP) is a reasonable means for the
petitioners to work together collectively to meet the swine waste set-aside
requirement.
 A Pro Rata Mechanism (PRM) is a reasonable and appropriate means for the
State’s electric power suppliers to meet the aggregate swine waste and poultry
waste set-aside requirements of G.S. 62-133.8(e) and (f). As it had earlier done
with regard to the aggregate swine waste set-aside requirement, the
Commission approved the joint procurement of RECs from energy produced
by poultry waste, the sharing of poultry waste generation bids among electric
suppliers, and other collaborative efforts as a reasonable means for the State’s
electric suppliers to work together to meet the poultry waste set-aside
requirement.
 The term “allocations made by the Southeastern Power Administration”
(SEPA), is used as a term of art in G.S. 62-133.8(c)(2)(c). Therefore, a
municipal electric power supplier or EMC will be permitted to use the total
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annual amount of energy supplied by SEPA to that municipality or EMC to
comply with its respective REPS requirement, subject to the 30% limitation
provided in G.S. 62-133.8(c)(2)(c).
 RECs associated with the thermal energy output of a CHP facility which uses
poultry waste as a fuel should not be eligible for use to meet the poultry waste
set-aside requirement under G.S. 62-133.8(f) The Commission reasoned that
the legislature’s inclusion of the phrases “or an equivalent amount of energy”
and “new metered solar thermal energy facilities” in subsection (d), coupled
with the lack of similar express language in subsection (f), demonstrated a clear
legislative intent to allow solar thermal RECs to meet the solar set-aside
requirement, but not to allow thermal RECs to meet the poultry waste set-aside
requirement.
 An electric public utility can recover through its fuel cost rider the total delivered
cost of the purchase of energy generated by a swine or poultry waste-to-energy
facility where the RECs associated with the production of the energy are
purchased by another North Carolina electric power supplier to comply with the
REPS statewide aggregate swine waste and poultry waste set-aside
requirements.
 Amendments to NC-RETS Operating Procedures, Rules R8-64 through R8-69,
and an application form for use by owners of renewable energy facilities in
obtaining registration of a facility under Rule R8-66 should be adopted. The
amendments to Rules R8-64 through R8-69 clarify and streamline the
application procedures, registration, record keeping, and other requirements
for renewable energy facilities.
 Commission Rules R8-67(b), R8-67(c), and R8-67(h) should be amended by
adding a requirement that REPS compliance plans contain a list of planned and
implemented demand-side management (DSM) measures and include a
measurement and verification (M&V) plan if one is not already filed with the
Commission. Additionally, the amendment added reporting requirements to the
REPS Compliance Reports for EMCs regarding EE and implementation of
M&V plans. The Order also required all electric power suppliers to review the
number of energy efficiency (EE) certificates they have reported to date and
submit any changes necessitated by the Order.
 That Commission Rules R8-61, R8-63, and R8-64 should be amended by
adding to the previously existing requirement that an application for a certificate
of public convenience and necessity (CPCN) contain a map and location of the
facility. The amendments require additional information including: 1) the
proposed site layout relative to the map; 2) all major equipment, including the
generator, fuel handling equipment, plant distribution system, and start up
equipment; 3) the site boundary; 4) planned and existing pipelines, planned
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and existing roads, planned and existing water supplies, and planned and
existing electric facilities.
 That the electric power suppliers made a reasonable effort to comply with the
swine waste and poultry waste set-aside REPS requirements in 2012, but will
not be able to comply. The Order concluded that it was in the public interest to
eliminate the swine waste set-aside requirement in 2012, and to delay the
implementation of the poultry waste set-aside requirement by one year until
2013. In addition to modifying the compliance schedules for the swine waste
and poultry waste set-aside REPS requirements, the Order also required that
DEC and DEP file tri-annual progress reports on their compliance with, and
efforts to comply with, the swine waste and poultry waste set-aside
requirements.
 The electric power suppliers made a reasonable effort to comply with the swine
waste and poultry waste set-aside REPS requirements in 2013, but will not be
able to comply. The Order concluded that it was in the public interest to delay
the implementation of the swine and poultry waste set-aside requirements by
one year until 2014. Finally, the Order concluded that the triannual progress
reporting requirement established in the Commission’s 2012 Delay Order
should also apply to Dominion, GreenCo, FPWC, EnergyUnited, Halifax,
NCEMPA and NCMPA1.
 Proceeds from REC sales should be credited to customers if the RECs were
purchased with REPS rider proceeds, or if the RECs were produced via a
generating facility that was paid for by customers. Further, the Commission
determined that, since it cannot anticipate every scenario, it will review REC
sales on a case-by-case basis in REPS rider proceedings and general rate
cases, as the issues arise. The Commission further determined that the electric
public utility will have the burden of proving that each REC sale was in the best
interest of its customers and should file complete information regarding the
original purchase price, resale price, the cost of replacement RECs and any
incremental administrative costs or brokerage fees incurred pursuant to the
transaction.
 The electric power suppliers made a reasonable effort to comply with the swine
waste set-aside REPS requirement in 2014, but will not be able to comply. The
Commission’s determination was based on based on the tri-annual reports
submitted by the electric power suppliers in Docket No. E-100, Sub 113A, the
Petitioners’ motion, and the intervenors’ comments. The Commission found
that, among the reasons the electric power suppliers would not be able to
comply, is that the technology is in early stages of development. Additionally,
the Order directed the Public Staff to conduct two stakeholder meetings in 2015
to discuss potential obstacles to achieving the swine and poultry waste
requirements and options for addressing them. Finally, the Order concluded
that the triannual progress reporting requirement established in the
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Commission’s 2012 Delay Order and expanded in the Commission’s 2013
Delay Order should continue until the Commission finds that they are no longer
necessary.
This Order resulted in the following updated compliance schedules for the
swine waste set-aside REPS requirement:
Calendar Year Requirement for Swine Waste Resources
2015-2016 0.07%
2017-2019 0.14%
2020 and thereafter 0.20%
 On June 3, 2014, the Commission issued an Order Requesting Comments
regarding the potential changes to Rules R8-64 and R8-65, as well as the
reporting requirements in Docket No. E-100, Subs 101, 83, and 41B (June
Order). In the June Order, the Commission took note that, over the past few
years, a large number of facilities, particularly solar photovoltaic, have been
filing applications for CPCNs. However, it is currently unclear whether
certificate holders for solar facilities are complying with this construction
progress report requirement. Further, due to the fact that there is no
requirement for notice of completion, the Commission cannot easily discern
how many facilities are actually being built. The June Order requested that
interested parties file comments by June 30, 2014, and that reply comments be
filed by July 21, 2014.
 It would be appropriate to streamline current reporting requirements to provide
a more coherent and complete picture of the status of non-utility generators
within North Carolina. The Commission’s order states that a consolidated report
would be beneficial to all parties. The Order required DEC, DEP and Dominion
to file by March 31, of each year, beginning March 31, 2015, three lists with the
following information:
a. An Interconnection Application List of all applications in the
utility’s interconnection queue that provides the owner’s name,
Commission Docket No., AC capacity (kW), fuel type(s), application
date, county and interconnection application status;
b. An Interconnection List of all generators interconnected with the
utility’s system in North Carolina that provides the owner’s name,
Commission Docket No., AC capacity (kW), fuel type(s), power delivery
date, county and whether the facility is net metering; and
c. A Purchased Power Agreement List of all facilities with which the
utility has a purchased power agreement (or application) that provides
the owner’s name, Commission Docket No., AC capacity (kW), fuel
type(s), energized date, tariff name(s), term (years), county and PPA
application status.
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Concurrently, the Order repealed the reporting requirement contained in
Commission Rule R8-64(e).
Since the October 1, 2015 report was submitted, the Commission has
issued a number of additional Orders interpreting various provisions of the REPS
statute and seeking additional information to aid the Commission in future
interpretations. The following Orders are of particular interest:
Order Modifying the Swine and Poultry Waste Set-Aside
Requirements and Providing Other Relief, Docket No. E-100, Sub 113
(December 1, 2015)
On August 12, 2015, DEC, DEP, Dominion, GreenCo, FPWC,
EnergyUnited, Halifax, TVA, NCEMPA, and NCMPA1 (Joint Movants) filed
a joint motion to modify and delay the 2015 swine and poultry waste
set-aside requirements of G.S. 62-133.8(e) and (f), respectively. Joint
Movants requested that the Commission relieve them of compliance with
the swine and poultry waste set-aside requirements by delaying their need
to comply with these requirements by one year until 2016. The Joint
Movants state that they have individually and collectively made reasonable
efforts to comply with the REPS swine and poultry waste resource
provisions. On August 18, 2015, the Commission issued an Order
Requesting Comments. On October 2, 2015, the North Carolina Poultry
Federation, the Public Staff and NCSEA filed comments. On October 9,
2015, North Carolina Pork Council and Optima KV, LLC, filed comments.
On October 16, 2015, DEC and DEP filed supplemental comments.
On December 1, 2015, the Commission issued an Order Modifying
the Swine and Poultry Waste Set-Aside Requirements and Providing Other
Relief. The Order concluded that the electric suppliers made a reasonable
effort to comply with the swine and poultry waste set-aside REPS
requirements in 2015, but would not be able to comply. As to the swine
waste set-aside requirement, the Commission notes that despite allowing
electric power suppliers to bank RECs for three years, the cumulative effect
of this banking has yet to result in the ability to comply with the initial swine
waste set-aside. Therefore, the Commission concluded that it is in the public
interest to delay the entire requirement of G.S. 62-133.8(e) for one year and
allow electric power suppliers to continue to bank RECs for swine waste
set-aside requirement compliance in future years. As to the poultry waste
set-aside requirement, the Commission notes that compliance has been
hindered by the fact that the technology of power production from poultry
waste continues to be in its early stages of development. No party
presented evidence that the aggregate 2015 poultry waste set-aside could
be met, however, the Public Staff, DEC and DEP state that, due to the
availability of RECs pursuant to Section 4 of S.L. 2010-195, as amended by
S.L. 2011-279 (Senate Bill 886), the 2014 level of the poultry waste
set-aside could be maintained. Therefore, the Commission concluded that
24
the poultry waste set-aside requirement should be modified by adding an
additional year (2015) of compliance at the 170,000 MWh threshold, prior
to escalating the requirement to 700,000 MWh.
The Order resulted in the following updated compliance schedules
for the swine waste and poultry waste set-asides REPS requirements:
Calendar Year Requirement for Swine Waste Resources
2016-2017 0.07%
2018-2020 0.14%
2021 and thereafter 0.20%
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 MWh
2015 170,000 MWh
2016 700,000 MWh
2021 and thereafter 900,000 MWh
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, DEC, Dominion,
GreenCo, FPWC, EnergyUnited, Halifax, TVA, NCMPA1, and NCEMPA,
filed a motion to delay the requirements of the 2016 swine waste set-aside
and to modify the requirements of the poultry waste set-aside. The
Commission has requested comments on the matter and it is pending
before the Commission.
Order Establishing 2015 Poultry Waste Set-Aside Requirement
Allocation, Docket No. E-100, Sub 113 (December 15, 2014)
On October 19, 2015 in Docket No. E-100, Sub 113, the Commission
issued an Order Addressing Poultry Compliance Shortfall and Requesting
Comments on New Allocation Method. In that Order, the Commission found
that the current functionality in NC-RETS for allocating the aggregate
poultry waste set-aside requirement is “too dynamic” in that every electric
power supplier’s obligation changes whenever one electric power supplier
corrects a retail sales data That Order also requested comments as to
alternative methods of allocating the aggregate poultry waste set-aside
requirement to be filed by December 30, 2015 and reply comments to be
filed by January 29, 2016.
On December 15, 2015, the Commission issued an Order
Establishing 2015 Poultry Waste Set-Aside Requirement Allocation. The
Commission recognized that the pendency of the matter regarding the
allocation of the aggregate poultry waste set-aside requirement for 2015
created uncertainty for electric power suppliers. Therefore, the Commission
found good cause to clarify the allocation of the aggregate poultry waste
set-aside requirement for compliance year 2015. The Order established that
25
the 2014 retail sales data reported to NC-RETS by electric power suppliers
and utility compliance aggregators, shall be used to allocate, on a pro-rata
basis, the 170,000 MWh aggregate poultry waste set-aside requirement for
2015.
Order Establishing Method of Allocating the Aggregate Poultry
Waste Resource Set-Aside Requirement, Docket E-100, Sub 113
(April 18, 2016)
On October 19, 2015 in Docket No. E-100, Sub 113, the Commission
issued an Order Addressing Poultry Compliance Shortfall and Requesting
Comments on New Allocation Method. In that Order, the Commission found
that the current functionality in NC-RETS for allocating the aggregate
poultry waste set-aside requirement is “too dynamic” in that every electric
power supplier’s obligation changes whenever one electric power supplier
corrects a retail sales data error. That Order also requested comments as
to alternative methods of allocating the aggregate poultry waste set-aside
requirement to be filed by December 30, 2015 and reply comments to be
filed by January 29, 2016. On December 30, 2015, DEC and DEP jointly
filed comments as did the Public Staff. No reply comments were filed. DEC’s
and DEP’s joint comments and those of the Public Staff were in agreement
as to a proposed method of allocating the aggregate poultry waste set-aside
requirement based on three years of average annual retail sales with the
resulting allocation held constant for three years. No party opposed this
recommendation.
On April 18, 2016, in Docket No. E-100, Sub 113, the Commission
issued an Order Establishing Method of Allocating the Aggregate Poultry
Waste Resource Set-Aside Requirement concluding that the proposal put
forward by the Public Staff and supported by DEC and DEP is a reasonable
way to proceed. The Order established that, starting with the 2016
compliance year, the aggregate poultry waste set-aside obligation shall be
allocated among the electric power suppliers by averaging three years of
historic retail sales (2013, 2014, and 2015), with the resulting allocation held
constant for three years (2016, 2017, and 2018).
Order on NCSEA’s Request, Docket No. E-100, Sub 113
(June 6, 2016)
On June 1, 2015, NCSEA filed a Request for Declaratory Ruling on
Meaning of G.S. 62-133.9 and Commission Rule R8-67. In summary,
NCSEA requested that the Commission issue a declaratory ruling that a
new topping cycle combined heat and power (CHP) system, including such
a system that uses nonrenewable energy resources, that both produces
electricity or useful, measureable thermal or mechanical energy at a retail
customer’s facility and results in less energy being used to perform the
26
same function or provide the same level of service at the retail electric
customer’s facility constitutes an “energy efficiency measure” for purposes
of G.S. 62-133.9 and Commission Rule R8-67. DEC and DEP jointly filed
comments arguing that topping cycle CHP systems do not use waste heat
to produce electricity, and therefore, do not qualify as energy efficiency
measures under G.S. 62-133.8(a)(4), except to the extent that they use
waste heat to produce electricity or useful, measureable thermal or
mechanical energy. The Public Staff filed comments supporting an
interpretation of the REPS statute that would only allow electricity or
measureable useful energy from the waste heat component of a topping
cycle CHP to qualify for energy efficiency. On October 14, 2015, NCSEA
filed reply comments responding to the other parties’ comments.
On June 6, 2016, in Docket No. E-100, Sub 113, the Commission
issued an Order on NCSEA’s Request concluding that a topping cycle
combined heat and power system does not constitute an energy efficiency
measure under G.S. 62-133.8(a)(4), except to the extent that the secondary
component, the waste heat component, is used. On June 6, 2016, NCSEA
filed a Notice of Appeal and Exceptions. This matter is pending before the
North Carolina Court of Appeals.
Order Establishing the 2016, 2017, and 2018 Poultry Waste Set-Aside
Requirement Allocation
On August 5, 2016, in Docket No. E-100, Sub 113, the Commission
Issued an Order Establishing the 2016, 2017, and 2018 Poultry Waste
Set-Aside Requirement Allocation. The Order established that the
aggregate poultry waste set-aside requirement for 2016, 2017, and 2018
shall be allocated among the electric power suppliers and utility compliance
aggregators based on the load ratio share calculations filed by the
NC-RETS administrator in Docket No. E-100, Sub 113 on July 11, 2016 and
the methodology previously adopted by the Commission. The resulting
requirements will be held constant for three years, and the allocation
process will be repeated in 2018 in order to set the allocation requirements
for compliance years 2019, 2020, and 2021.
Renewable Energy Facilities
The REPS statute defines certain electric generating facilities as renewable
energy facilities or new renewable energy facilities. RECs associated with electric
or thermal power generated at such facilities may be used by electric power
suppliers for compliance with the REPS requirement as provided in
G.S. 62-133.8(b) and (c). In its rulemaking proceeding, the Commission adopted
rules providing for a report of proposed construction, certification or registration of
renewable energy facilities and new renewable energy facilities.
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Pursuant to G.S. 62-110.1(a), no person, including any electric power
supplier, may begin construction of an electric generating facility in North Carolina
without first obtaining from the Commission a certificate of public convenience and
necessity (CPCN). Two exemptions from this certification requirement are provided
in G.S. 62-110.1(g): (1) self-generation, and (2) nonutility-owned renewable
generation under 2 MW. Any person exempt from the certification requirement must,
nevertheless, file a report of proposed construction with the Commission pursuant
to Rule R8-65.
To ensure that each renewable energy facility from which electric power or
RECs are used for REPS compliance meets the particular requirements of Senate
Bill 3, the Commission adopted Rule R8-66 to require that the owner, including an
electric power supplier, of each renewable energy facility or new renewable energy
facility register with the Commission if it intends for RECs it earns to be eligible for
use by an electric power supplier for REPS compliance. This registration
requirement applies to both in-state and out-of-state facilities. As of September 1,
2016, the Commission has accepted registration statements filed by 1419 facilities.
As detailed in the 2015 REPS Report, the Commission has issued a number
of orders addressing issues related to the registration of a facility, including the
definition of “renewable energy resource,” as summarized below.
 Accepted registration as a new renewable energy facility a 1.6-MW electric
generating facility to be located near Clinton in Sampson County, North Carolina,
and fueled by methane gas produced from anaerobic digestion of organic wastes
from a Sampson County pork packaging facility and from a local swine farm.
 Issued a declaratory ruling that: (1) the percentage of refuse-derived fuel (RDF)
that is determined by testing to be biomass, and the synthesis gas (Syngas)
produced from that RDF is a “renewable energy resource” as defined in
G.S. 62-133.8(a)(8); (2) the applicant’s delivery of Syngas from a co-located
gasifier to an electric utility boiler would not make the company a “public utility” as
defined in G.S. 62-3(23); and (3) the applicant’s construction of a co-located
gasifier and the piping connection from the gasifier to an existing electric utility
boiler would not require a CPCN under G.S. 62-110(a) or under G.S. 62-110.1(a).
 Issued an Order amending existing CPCNs for two electric generating facilities
in Southport and Roxboro, North Carolina, that were being converted to burn a
fuel mix of coal, wood waste, and tire-derived fuel (TDF). The Commission
concluded that the portion of TDF derived from natural rubber, an organic
material, meets the definition of biomass, and is eligible to earn RECs, but
required the applicant to submit additional information to demonstrate the
percentage of TDF that is derived from natural rubber. In addition, the
Commission accepted registration of the two facilities as new renewable energy
facilities.
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 Accepted registration as a new renewable energy facility a 1.6-MW CHP facility
to be located in Darlington County, South Carolina, that will generate electricity
using methane gas produced via anaerobic digestion of poultry litter from a
chicken farm mixed with other organic, biodegradable materials, and use the
waste heat from the electric generators to provide temperature control for the
methane-producing anaerobic digester as well as the chicken houses. The
Commission concluded that the thermal energy used as an input back into the
anaerobic digestion process effectively increases the efficiency of the electric
production from the facility; but is not used to directly produce electricity or
useful, measureable thermal or mechanical energy at a retail electric
customer’s facility pursuant to G.S. 62-133.8(a)(1); and is not eligible for RECs.
However, the thermal energy that is used to heat the chicken houses is eligible
to earn RECs.
 Issued a declaratory ruling that: (1) biosolids, the organic material remaining
after treatment of domestic sewage and combusted at the applicant’s
wastewater treatment plant, are a “renewable energy resource” as defined by
G.S. 62-133.8(a)(8); and (2) the applicant, a county water and sewer authority
organized in 1992 pursuant to the North Carolina Water and Sewer Authorities
Act, is specifically exempt from regulation as a public utility pursuant to
G.S. 62-3(23)(d).
 Accepted for registration as a new renewable energy facility a solar thermal hot
water heating facility located in Mecklenburg County, North Carolina, used to
heat two commercial swimming pools. The Commission concluded, however,
that as an unmetered solar thermal facility, RECs earned based on the capacity
of the solar panels are not eligible to meet the solar set-aside requirement of
G.S. 62-133.8(d). However, the Commission allowed the applicant to earn
general thermal RECs based upon an engineering analysis of the energy from
the unmetered solar thermal system that is actually required to heat the pools,
which was determined to be substantially less than the capacity of the solar
thermal panels.
 Issued an Order concluding that primary harvest wood products, including
wood chips from whole trees, are “biomass resources” and “renewable energy
resources” under G.S. 62-133.8(a)(8). The Commission reasoned that the
General Assembly, by including several specific examples of biomass in the
statute, did not intend to limit the scope of the term to those examples. Rather,
the term “biomass” encompasses a broad category of resources and should
not be limited absent express intent to do so. The Environmental Defense Fund
and NCSEA appealed the Commission’s Order to the North Carolina Court of
Appeals. On August 2, 2011, the Court of Appeals issued a decision affirming
the Commission’s Order.
 Issued an Order declaring that yard waste and the percentage of RDF used as
fuel are renewable energy resources, and that the percentage of Syngas
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produced from yard waste and RDF used as fuel is a renewable energy
resource. The Commission held that yard waste is an organic material having
a constantly replenished supply, and, thus, is a renewable resource under
G.S. 62-133.8(a)(8).
 Accepted for registration as a new renewable facility a CHP facility, determining
that the portion of electricity produced by landfill gas will be eligible to earn
RECs and the portion of waste steam produced from the electric turbines that
is used as an input for a manufacturing process will be eligible to earn thermal
RECs. However, the Commission also concluded that steam that bypasses the
turbine generators and waste heat being used to pre-heat the feedwater for the
boilers will not be used to directly produce electricity or useful, measureable
thermal or mechanical energy at a retail electric customer’s facility pursuant to
G.S. 62-133.8(a)(1), and, therefore, will not be eligible to earn RECs.
 Accepted registration of residential solar thermal water heating facilities on over
one thousand homes which were allowed to install meters on a representative
sample of the homes, rather than on each home, to determine the number of
British Thermal Units (BTUs) of thermal energy that will be produced and on
which RECs will be earned, and assigned to the unmetered homes the thermal
heat measures recorded on the metered homes.
 Issued an Order accepting the registrations of nine solar thermal facilities, but
found that a request for a waiver of the requirement in G.S. 62-133.8(d) that
solar thermal energy be measured by a meter in order to produce RECs eligible
to meet the solar set-aside requirement was inappropriate, disallowing the use
of RETScreen Analysis Software (RETScreen) to calculate the estimated solar
thermal production of each facility. The Commission notes that there was no
cited or known legal authority by which the Commission is authorized to grant
such a waiver. Further, the Commission concluded that the use of RETScreen
is not appropriate because it estimates the total amount of solar thermal energy
that could be produced, rather than the amount of energy actually used to heat
water.
 The Commission denied the registration of a thermal system as a new
renewable energy facility based upon the fact that the system would be
integrated into an existing biomass facility and the thermal energy would be
used to pre-heat the feed water entering the biomass-fueled boiler resulting in
the use of less biomass fuel. The Commission concluded that it was
appropriate to view the facility as one entity eligible to earn RECs on the
electrical output of the biomass-fueled boiler, rather than two separate entities
capable of earning RECs.
 Granted CPCNs with conditions and accepted registrations as new renewable
energy facilities for a 300-MW wind facility in Pasquotank and Perquimans
Counties and an 80-MW wind facility in Beaufort County.
30
 Issued an Order declaring that directed biogas is a renewable energy resource.
The Commission’s order states that for a facility to earn RECs on electricity
created using directed biogas appropriate attestations must be made and
records kept regarding the source and amounts of biogas injected into the
pipeline and used by the facility to avoid double counting. The Commission’s
order further notes that as provided in Commission Rule R8-67(d)(2) a facility
utilizing directed biogas would earn RECs “based only upon the energy derived
from renewable energy resources in proportion to the relative energy content
of the fuels used.” Finally, the Commission notes that each facility’s registration
will be considered on a case-by-case basis, and that the Commission had not
addressed whether RECs earned would be subject to the out-of-state limitation
on unbundled RECs under G.S. 62-133.8(b)(2)(e).
 Issued an Order stating that the policy that only net output is eligible for the
issuance of RECs was not based solely on the definition of “station service” in the
Commission rules, but that G.S. 62.133.8(a)(6) requires that RECs be derived
from “electricity or equivalent energy” that is “supplied by a renewable energy
facility.” The Commission held that gross electricity used to power the facility
itself cannot be considered electricity “supplied by a renewable energy facility.”
The Commission interpreted “station service” to encompass all electric demand
consumed at the generation facility that would not exist but for the generation itself,
including, but not limited to, lighting, office equipment, heating, and air-conditioning
at the facility.
 Issued an Order finding that, because compensation could be built into
alternative financial arrangements to recover the costs of electric generation, a
scenario in which an electricity producer sold steam and gave away electricity
must be considered “[p]roducing, generating, transmitting, delivering, or
furnishing electricity … to or for the public for compensation” under
G.S. 62-3(23)a.1. The Commission notes that were it to rule otherwise it would
create multiple scenarios in which an electric generator could provide electrical
services “free of charge” to a third party and build in compensation to recover
its costs via other arrangements, thus, avoiding the statutory definition of a
public utility in G.S. 62-3(23)a.1.
 Issued an Order on Request for Declaratory Ruling addressing the eligible
output, pursuant to S.L. 2010-195 (Senate Bill 886), to which triple credit is
applied to any electric power or RECs generated by an eligible facility. The
Commission held that, although the first 20 MW of biomass renewable energy
facility generating capacity remained eligible for the triple credit, only the first
10 MW of biomass renewable energy facility generating capacity was eligible
to earn additional credits to meet the poultry waste set-aside requirements in
G.S. 62-133.8(f). The Commission held that the limit was on the electric
generating capacity, not the amount of energy or RECs that may be earned,
and that RECs may be derived from both the electric generation and the waste
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heat used to produce electricity or useful, measurable thermal or mechanical
energy at a retail electric customer's facility
 Issued an Order accepting amended registrations of a 1.9-MWAC Directed
Biogas-fueled combined heat and power (CHP) facility and a 1.6-MWAC
biomass fueled CHP facility that would generate electricity through the pyrolysis
of wood (the first of this type registered in the State). Both facilities were
certified bv the Secretary of State as being located in a “cleanfields renewable
energy demonstration parks.”
 Issued an Order revoking the registrations of 63 facilities registered as
renewable energy facilities or as new renewable energy facilities with the
Commission. The owners of the 63 facilities listed in Appendices A and B of the
Order did not complete their annual certifications on or before October 15,
2014, as required by the Commission’s September 9, 2014 Order, nor had an
annual certification been completed for these facilities as of the date of the
Order. The Order states that should the owner of a facility whose registration
has been revoked wish to have the energy output from its facility become
eligible for compliance with the REPS; the owner must again register the facility
with the Commission.
 Issued an Order Accepting Registration of Incremental Capacity as a New
Renewable Energy Facility, finding that, consistent with previous Commission
orders, the incremental capacity of Weyerhaeuser NR Company’s renovated
CHP system, added subsequent to January 1, 2007, is a “new” renewable
energy facility pursuant to G.S. 62-133.8(a)(7). Weyerhaeuser was required to
register a new project for the incremental portion in NC-RETS to facilitate the
issuance of RECs, with 22.1% of the facility’s electric generation and 12.2% of
the facility’s thermal generation reported for the new project and the remainder
for the existing project.
 Issued an Order giving notice of its intent to revoke the registration of
233 renewable energy facilities and new renewable energy facilities because
their owners had not completed or filed the annual certifications required each
April 1, as detailed in Commission Rule R8-66(b) (44 facilities registered with
NC-RETS did not complete the on-line form and 189 did not file a verified
certification with the Commission). Facility owners were given until October 1,
2015, to file their annual certifications belatedly. Owners that do not complete
the annual certifications face their facility’s registrations being revoked
pursuant to Commission Rule R8-66(f). The matter is pending before the
Commission.
Since the October 1, 2015 report was submitted, the Commission has
issued additional orders interpreting provisions of the REPS Statute regarding
applications for registration of renewable energy facilities, as described below.
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Order Revoking Registration of Renewable Energy Facilities
and New Renewable Energy Facilities, Docket No. E-100, Sub 130
(December 2, 2015).
On December 2, 2015, the Commission issued an Order revoking
the registrations of 127 facilities registered with the Commission as
renewable energy facilities or as new renewable energy facilities. The
owners of the 127 facilities did not complete their annual certifications on or
before October 1, 2015, as required by the Commission’s August 12, 2015
Order, nor had an annual certification been completed for these facilities as
of the date of the Order. The Order states that should the owner of a facility
whose registration has been revoked wish to have the energy output from
its facility become eligible for compliance with the REPS, the owner must
again register the facility with the Commission.
Order Accepting Registration of New Renewable Energy
Facilities, Docket No. E-7, Subs 1086 and 1087 (March 11, 2016).
On June 8, 2015, DEC filed registration statements as new
renewable energy facilities for its Buck and Dan River combined-cycle
generating facilities, respectively. DEC states that Buck and Dan River will
be combusting directed biogas derived from swine waste and other biomass
to generate electricity for DEC’s customers. DEC further states that it has
entered contracts with biogas suppliers that will produce biogas by
anaerobic digestion of swine waste and other biomass at facilities located
in the Midwest. The biogas produced by the biogas suppliers will be cleaned
to pipeline quality, metered, injected into the interstate pipeline system, and
nominated for use by DEC at Buck and Dan River.
On March 11, 2016, the Commission issued an Order Accepting
Registration of New Renewable Energy Facilities, accepting the registration
of DEC’s Buck and Dan River combined-cycle facilities as new renewable
energy facilities. Consistent with previous Commission orders, the
Commission found that when biogas derived from anaerobic digestion of
animal waste is injected into the natural gas pipeline, nominated for use by
a natural gas-fueled electric generating facility, and a proper showing can
be made that it is displacing or offsetting conventional natural gas, it is a
renewable energy resource pursuant to G.S. 62-133.8(a)(5). Noting that
Buck and Dan River were placed into service subsequent to January 1,
2007, the Commission concluded that those facilities are “new renewable
energy facilities” pursuant to G.S. 62-133.8(a)(7). The Commission further
concluded that the RECs associated with the renewable energy generated
at Buck and Dan River from directed biogas will not be deemed out-of-State
RECs subject to the 25% limitation on the use for REPS compliance of
unbundled out-of-State RECs.
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Order Giving Notice of Intent to Revoke Registration of
Renewable Energy Facilities and New Renewable Energy Facilities,
Docket No. E-100, Sub 130 (August 25, 2016).
On August 25, 2016, the Commission issued an Order giving notice
of its intent to revoke the registration of 26 renewable energy facilities and
215 new renewable energy facilities because their owners had not
completed or filed the annual certifications required each April 1, as detailed
in Commission Rule R8-66(b). Facility owners were given until October 1,
2016, to file their annual certifications belatedly. Owners that do not
complete the annual certifications face their facility’s registrations being
revoked pursuant to Commission Rule R8-66(f). The matter is pending
before the Commission.
North Carolina Renewable Energy Tracking System (NC-RETS)
In its February 29, 2008 Order in Docket No. E-100, Sub 113, the
Commission concluded that REPS compliance would be determined by tracking
RECs associated with renewable energy and EE. In its Order, the Commission
further concluded that a “third-party REC tracking system would be beneficial in
assisting the Commission and stakeholders in tracking the creation, retirement and
ownership of RECs for compliance with Senate Bill 3” and states that “[t]he
Commission will begin immediately to identify an appropriate REC tracking system
for North Carolina.” Pursuant to G.S. 133.8(k), enacted in 2009, the Commission
was required to develop, implement, and maintain an online REC tracking system
no later than July 1, 2010, in order to verify the compliance of electric power
suppliers with the REPS requirements.
On September 4, 2008, the Commission issued an Order in Docket
No. E-100, Sub 121, initiating a new proceeding to define the requirements for a
third-party REC tracking system, or registry, and to select an administrator. The
Commission established a stakeholder process to finalize a Requirements
Document for the tracking system.
After issuing an RFP and evaluating the bids received, the Commission
signed a Memorandum of Agreement (MOA) with APX, Inc. (APX), on
February 2, 2010, to develop and administer NC-RETS. Pursuant to the MOA, on
July 1, 2010, APX successfully launched NC-RETS. By letter dated
September 3, 2010, the Commission informed APX that, to the best of its
knowledge, NC-RETS has performed in substantial conformance with the MOA and
has no material defects. The Commission, therefore, authorized APX to begin billing
North Carolina electric power suppliers and other users the fees that were
established in the MOA.
Funding for NC-RETS is provided directly to APX by the electric power
suppliers in North Carolina that are subject to the REPS requirements of
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Senate Bill 3 and is recovered from the suppliers’ customers through the
REPS incremental cost rider. Owners of renewable energy facilities and other
NC-RETS users do not incur charges to open accounts, register projects, and
create and transfer RECs, but will incur nominal fees to export RECs to other
tracking systems or to retire RECs other than for REPS compliance.
At the end of 2015, each electric power supplier was required to place the
RECs that it acquired to meet its 2015 REPS requirements into compliance
accounts where the RECs are available for audit. The Commission will review each
electric power suppliers’ 2015 REPS compliance report; the associated RECs will
be permanently retired. Members of the public can access the NC-RETS web site
at www.ncrets.org. The site’s “Resources” tab provides extensive information
regarding REPS activities and NC-RETS account holders. NC-RETS also provides
an electronic bulletin board where RECs can be offered for purchase.
 As of December 31, 2015, NC-RETS had issued 39,291,430 RECs and
7,598,087 EE certificates. These numbers could increase because
renewable energy generators are allowed to enter historic production
data for up to two years.
 As of September 1, 2016, 470 organizations, including electric power
suppliers and owners of renewable energy facilities, had established
accounts in NC-RETS.
 As of September 1, 2016, approximately 1006 renewable energy or new
renewable energy facilities had been established as NC-RETS projects,
enabling the issuance of RECs based on their energy production data.
Pursuant to the MOA, APX has been working with other registries in the
United States, such as the Electric Reliability Council of Texas (ERCOT), to
establish procedures whereby RECs that were issued in those registries may be
transferred to NC-RETS. To date, such arrangements have been established with
five such registries. Additionally, the Commission has established an on-going
NC-RETS stakeholder group, providing a forum for resolution of issues and
discussion of system improvements.
The original MOA with APX expired on December 31, 2013. Based on
feedback received from stakeholders, the Commission extended the MOA with
APX through 2017.
Environmental Impacts
Pursuant to G.S. 62-133.8(j), the Commission was directed to consult with
the North Carolina Department of Environmental Quality (DEQ) in preparing its
report and to include any public comments received regarding direct, secondary,
and cumulative environmental impacts of the implementation of the REPS
35
requirements of Senate Bill 3. The Commission has not identified, nor has it
received from the public or DEQ, any public comments regarding direct,
secondary, and cumulative environmental impacts of the implementation of the
REPS provision of Senate Bill 3. DEQ, in response to the Commission’s request,
notes impacts on North Carolina’s air, water and land quality. DEQ’s full response
is attached to this report as a part of Appendix 1.
ELECTRIC POWER SUPPLIER COMPLIANCE
Pursuant to Senate Bill 3, electric power suppliers are required, beginning
in 2012, to meet an increasing percentage of their retail customers’ energy needs
by a combination of renewable energy resources and energy reductions from the
implementation of EE and DSM measures. Also, pursuant to Senate Bill 3, starting
in 2012, part of the REPS requirements must be met through poultry waste and
swine waste (as discussed above this requirement has been amended by the
Commission.) In addition, beginning in 2010 each electric power supplier was
required to meet a certain percentage of its retail electric sales “by a combination
of new solar electric facilities and new metered solar thermal energy facilities that
use one or more of the following applications: solar hot water, solar absorption
cooling, solar dehumidification, solar thermally driven refrigeration, and solar
industrial process heat.” G.S. 62-133.8(d). An electric power supplier is defined as
“a public utility, an electric membership corporation, or a municipality that sells
electric power to retail electric power customers in the State.” G.S. 62-133.8(a)(3).
Described below are the REPS requirements for the various electric power
suppliers and, to the extent reported to the Commission, the efforts of each toward
REPS compliance.
Monitoring of Compliance with REPS Requirement
Monitoring of electric power supplier compliance with the REPS
requirement of Senate Bill 3 is accomplished through annual filings with the
Commission. The rules adopted by the Commission require each electric power
supplier to file an annual REPS compliance plan and REPS compliance report to
demonstrate reasonable plans for and actual compliance with the REPS
requirement.
Compliance plan
Pursuant to Commission Rule R8-67(b), on or before September 1 of each
year, each electric power supplier is required to file with the Commission a REPS
compliance plan providing, for at least the current and following two calendar
years, specific information regarding its plan for complying with the REPS
requirement of Senate Bill 3. The information required to be filed includes, for
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example, forecasted retail sales, RECs earned or purchased, EE measures
implemented and projected impacts, avoided costs, incremental costs, and a
comparison of projected costs to the annual per-account cost caps.
Compliance report
Pursuant to Commission Rule R8-67(c), each electric power supplier is
required to annually file with the Commission a REPS compliance report. While a
REPS compliance plan is a forward-looking forecast of an electric power supplier’s
REPS requirement and its plan for meeting that requirement, a REPS compliance
report is an annual look back at the RECs earned or purchased and energy savings
actually realized during the prior calendar year and the electric power supplier’s
actual progress toward meeting its REPS requirement. Thus, as part of this annual
REPS compliance report, each electric power supplier is required to provide
specific information regarding its experience during the prior calendar year,
including, for example, RECs actually earned or purchased, retail sales, avoided
costs, compliance costs, status of compliance with its REPS requirement, and
RECs to be carried forward to future REPS compliance years. An electric power
supplier must file with its REPS compliance report any supporting documentation
as well as the direct testimony and exhibits of expert witnesses. The Commission
will schedule a hearing to consider the REPS compliance report filed by each
electric power supplier.
For each electric public utility, the Commission will consider the REPS
compliance report and determine the extent of compliance with the REPS
requirement at the same time as it considers cost recovery pursuant to the REPS
incremental cost rider authorized in G.S. 62-133.8(h). Each EMC and
municipally-owned electric utility, over which the Commission does not exercise
ratemaking authority, is required to file its REPS compliance report on or before
September 1 of each year.
Cost Recovery Rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider to recover the incremental costs incurred to comply with the REPS
requirement and to fund certain research. The annual rider, however, may not
exceed the following per-account annual charges:
Customer Class 2008-2011 2012-2014 2015 and thereafter
Residential per account $10.00 $12.00 $34.00
Commercial per account $50.00 $150.00 $150.00
Industrial per account $500.00 $1,000.00 $1,000.00
Commission Rule R8-67(e) establishes a procedure under which the
Commission will consider approval of a REPS rider for each electric public utility.
The REPS rider operates similar to the fuel charge adjustment rider authorized in
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G.S. 62-133.2. Each electric public utility is required to file its request for a REPS
rider at the same time as it files the information required in its annual fuel charge
adjustment proceeding, which varies for each utility. The test periods for both the
REPS rider and the fuel charge adjustment rider are the same for each utility, as
are the deadlines for publication of notice, intervention, and filing of testimony and
exhibits. A hearing on the REPS rider will be scheduled to begin as soon as
practicable after the hearing held by the Commission for the purpose of
determining the utility’s fuel charge adjustment rider. The burden of proof as to
whether the REPS costs were reasonable and prudently incurred shall be on the
electric public utility. Like the fuel charge adjustment rider, the REPS rider is
subject to an annual true-up, with the difference between reasonable and prudently
incurred incremental costs and the revenues that were actually realized during the
test period under the REPS rider then in effect reflected in a REPS experience
modification factor (REPS EMF) rider. Pursuant to G.S. 62-130(e), any over-collection
under the REPS rider shall be refunded to a utility’s customers with
interest through operation of the REPS EMF rider.
Electric Public Utilities
There are three electric public utilities operating in North Carolina subject to
the jurisdiction of the Commission: DEP, DEC, and Dominion. Although DEC and
DEP underwent a merger in 2012, for REPS compliance purposes they continue
to operate as two distinct entities.
REPS requirement
G.S. 62-133.8(b) provides that each electric public utility in the State (DEC,
DEP, and Dominion) shall be subject to a REPS requirement according to the
following schedule:
Calendar Year REPS Requirement
2012 3% of prior year’s North Carolina retail sales
2015 6% of prior year’s North Carolina retail sales
2018 10% of prior year’s North Carolina retail sales
2021 and thereafter 12.5% of prior year’s North Carolina retail sales
An electric public utility may meet the REPS requirement by any one or more of
the following:
 Generate electric power at a new renewable energy facility.
 Use a renewable energy resource to generate electric power at a
generating facility other than the generation of electric power from
waste heat derived from the combustion of fossil fuel.
 Reduce energy consumption through the implementation of an
EE measure; provided, however, an electric public utility subject to
38
the provisions of this subsection may meet up to 25% of the
requirements of this section through savings due to implementation
of EE measures. Beginning in calendar year 2021 and each year
thereafter, an electric public utility may meet up to 40% of the
requirements of this section through savings due to implementation
of EE measures.
 Purchase electric power from a new renewable energy facility.
Electric power purchased from a new renewable energy facility
located outside the geographic boundaries of the State shall meet
the requirements of this section if the electric power is delivered to a
public utility that provides electric power to retail electric customers
in the State; provided, however, the electric public utility shall not sell
the RECs created pursuant to this paragraph to another electric
public utility.
 Purchase RECs derived from in-state or out-of-state new renewable
energy facilities. Certificates derived from out-of-state new
renewable energy facilities shall not be used to meet more than 25%
of the requirements of this section, provided that this limitation shall
not apply to Dominion.
 Use electric power that is supplied by a new renewable energy facility
or saved due to the implementation of an EE measure that exceeds
the requirements of this section for any calendar year as a credit
towards the requirements of this section in the following calendar
year or sell the associated RECs.
 Reduce energy consumption through “electricity demand reduction,”
which is a voluntary reduction in the demand of a retail customer
achieved by two-way communications devices that are under the real
time control of the customer and the electric public utility.5
Duke Energy Progress, LLC (DEP)
Compliance Report
On June 17, 2015, in Docket No. E-2, Sub 1071, DEP filed its 2014 REPS
compliance report and application for approval of its 2015 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2015: $1.17 per month for residential
customers; $6.65 per month for general service/lighting customers; and $60.77 per
month for industrial customers; each of which is below the incremental per-account
5 Sec. 1 of S.L. 2011-55 amended G.S. 62-133.8(a) by adding a definition of “electricity
demand reduction,” and Sec. 2 amended G.S. 62-133.8(b)(2) by adding a new subsection (g)
making electricity demand reduction a REPS resource, effective April 28, 2011.
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cost cap established in G.S. 62-133.8(h). In its 2014 REPS compliance report,
DEP indicates that it acquired sufficient RECs to meet the 2014 requirement of 3%
of its 2013 retail sales (1,112,760 RECs representing 3% of combined 2013 retail
megawatt-hour sales). Additionally, DEP indicates that it acquired sufficient solar
RECs to meet the 2014 requirement of 0.07% of its 2013 retail sales
(25,969 RECs). DEP also indicates that, in combination with RECs eligible for the
poultry requirement pursuant to Session Law 2010-195 (S886), it was able to meet
the poultry waste set-aside requirement in 2014. Pursuant to the Commission’s
November 13, 2014 Order in Docket No. E-100, Sub 113, DEP’s 2014 swine waste
set-aside requirement was delayed until 2015. The Commission held a hearing on
DEP’s 2014 REPS compliance report and 2015 REPS cost recovery rider on
September 15, 2015. On November 17, 2015, the Commission issued an Order
Approving REPS and REPS EMF Rider and 2014 REPS Compliance. The Order
approved the following total REPS riders applicable to DEP for service rendered
on or after December 1, 2015: $1.17 per month for residential customers;
$6.66 per month for commercial customers; and $60.85 per month for industrial
customers. In addition, the Order approved DEP’s 2014 REPS compliance report
and retired the RECs and EECs associated with that account.
On June 30, 2016, in Docket No. E-2, Sub 1109, DEP filed its 2015 REPS
compliance report and application for approval of its 2016 REPS cost recovery
rider pursuant to G.S. 62-133.8 and Rule R8-67. By its application and testimony,
DEP proposed to implement the following total REPS rates effective for service
rendered on and after December 1, 2016: $1.31 per month for residential
customers; $10.78 per month for general service/lighting customers; and
$83.33 per month for industrial customers. DEP’s proposed rates for residential
customers and for general service/lighting customers are both below the
incremental per-account cost cap established in G.S. 62-133.8(h). However,
DEP’s proposed rate for industrial customers, on an annual basis is $999.96 per
customer account, as compared to the annual cost cap of $1,000.00 per customer
account. DEP’s proposed new REPS rider, if approved, will increase the current
REPS rates (excluding gross receipts taxes and regulatory fee) by $0.14 per month
for residential customers; by $4.12 per month for general service/lighting
customers; and by $22.48 per month for industrial customers. In its 2015 REPS
compliance report, DEP indicates that it acquired sufficient RECs to meet the 2015
requirement of 6% of its 2014 retail sales. Additionally, DEP indicates that it
acquired sufficient solar RECs to meet the 2015 requirement of 0.14% of its 2014
retail sales. DEP also indicates that it was able to meet the revised poultry waste
set-aside requirement in 2015. Pursuant to the Commission’s December 1, 2015
Order in Docket No. E-100, Sub 113, DEP’s 2015 swine waste set-aside
requirement was delayed until 2016. On September 20, 2016, the Commission
held a hearing on DEP’s 2015 REPS compliance report and 2016 REPS cost
recovery rider. A final decision is pending before the Commission.
40
Compliance Plan
On September 1, 2015, in Docket No. E-100, Sub 141, DEP filed its
2015 REPS compliance plan as part of its 2015 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; (2) purchases of RECs; (3) operations of company-owned
renewable facilities; and (4) research studies to enhance its ability to comply in
future years. On February 8, 2016, the Commission held a required public hearing
on DEP’s 2015 REPS compliance plan and 2015 IRP update report. On March 22,
2016, the Commission issued an Order Accepting Filing of 2015 Update Reports
and Approving 2015 REPS Compliance Plans accepting DEP’s IRP update and
REPS compliance plan. On February 8, 2016, the Commission held a required
public hearing on DEP’s 2015 REPS compliance plan and 2015 IRP update report.
On March 22, 2016, the Commission issued an Order Accepting Filing of 2015
Update Reports and Approving 2015 REPS Compliance Plans accepting DEP’s
IRP update and REPS compliance plan.
On September 1 2016, in Docket No. E-100, Sub 147, DEP filed its
2016 REPS compliance plan as part of its 2016 Integrated Resource Plan (IRP)
update report. In its plan, DEP indicates that its overall compliance strategy to meet
the REPS requirements consisted of the following key components: (1) purchases
of RECs; (2) operations of company-owned renewable facilities; (3) energy
efficiency programs that will generate savings that can be counted towards
obligation requirements; and (4) research studies to enhance its ability to comply
in future years. DEP has agreed to provide REPS compliance services for the
following wholesale customers, as allowed under G.S. 62-133.8(c)(2)(e): the
towns of Black Creek, Lucama, Sharpsburg, Stantonsburg, and Winterville.
DEP states that it intends to fully satisfy and vastly exceed the minimum
solar set-aside requirements of 0.14% of the prior year’s retail sales in 2016 and
2017 and 0.20% of prior year’s retail sales in 2018 through purchase power
agreements, company-owned solar PV facilities, and REC purchases. Based on
its 2015 retail sales DEP’s 2016 solar set-aside requirement is approximately
52,605 RECs. Based on forecasted retail sales DEP’s solar set-aside requirement
is projected to be approximately 52,373 RECs in 2016 and 75,275 RECs in 2017.
DEP identifies three primary methods for compliance with the swine waste
set-aside requirement: (1) on-farm generation; (2) centralized digestion; and
(3) injected/directed biogas. DEP states that despite its active and diligent efforts,
it will be unable to comply with the requirement in 2016 and is highly uncertain of
its ability to comply in 2016 and 2017 due to multiple variables, particularly related
to counterparty achievement of projected delivery requirements and commercial
operation milestones. Therefore, DEP notes that it has joined other electric power
suppliers in a motion to delay the swine waste set-aside requirement by one year.
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As to compliance with the poultry waste set-aside requirements, DEP states
that it continues to pursue various efforts to meet its compliance requirement,
including, (1) direct negotiations for additional supplies of both in-state and out-of-state
resources with multiple counterparties; (2) gaining an understanding of the
technological, permitting, and operational risks associated with various methods
to produce qualifying RECs; (3) exploring leveraging current biomass contracts by
working with developers to add poultry waste to their fuel mix; (4) exploring poultry
derived directed biogas at facilities in North Carolina for use at its combined cycle
plants; and (5) utilizing its REC trader to search for out-of-state poultry RECs
available in the market. DEP states that, in spite of these efforts, it has been unable
to secure enough RECs to comply with its share of the 2016 aggregate
poultry waste set-aside requirement (197,939 RECs) and that its ability
to achieve compliance with the requirements in 2017 (254,493 RECs) and 2018
(254,493 RECs) remains uncertain and largely subject to counterparty
performance.
DEP states that its general REPS requirement, net of the set-asides
discussed above, is estimated to be 1,977,517 RECs in 2016; 1,911,494 RECs in
2017 and 3,381,274 RECs in 2018. DEP notes several resource options available
to the Company to meet its general requirement, including, using the maximum
allowable use of EE savings (25%), hydroelectric power procured from suppliers
and from its wholesale customers SEPA allocations, and a variety of biomass, wind
and solar resources. DEP states that it purchases RECs from multiple biomass
facilities in the Carolinas, including landfill gas to energy facilities and biomass
fueled combined heat and power facilities. DEP states that it recognizes that some
land-based wind developers are presently pursuing projects of significant size in
North Carolina and that opportunities may exist to transmit land-based wind energy
resources into North Carolina from other regions. DEP plans to meet a portion of
the general requirement with RECs from solar facilities above that portion required
by the solar set-aside. DEP states it views the downward trend in solar equipment
and installation costs as a positive trend and that it expects solar resources to
contribute to compliance efforts beyond the solar set-aside minimum threshold.
Approval of DEP’s 2016 Compliance Plan is pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEP, along with several
other parties, filed a motion to delay the requirements of the 2016 swine waste
set-aside and to modify the requirements of the poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Duke Energy Carolinas, LLC (DEC)
Compliance Report
On March 9, 2016, in Docket No. E-7, Sub 1106, as corrected by a filing on
March 15, 2016, DEC filed its 2015 REPS compliance report and an application
42
for approval of a REPS rider to be effective September 1, 2016. The application
requested a total REPS rider of $0.95 per month for residential customers;
$4.38 per month for general customers (the DEC equivalent of commercial class
customers); and $22.27 per month for industrial customers; each of which is below
the incremental per-account cost cap established in G.S. 62-133.8(h). In its
2015 REPS compliance report, DEC indicates that it acquired sufficient RECs to
meet the 2015 requirement of 6% of its 2014 retail sales. Additionally, DEC
indicates that it acquired sufficient solar RECs to meet the 2015 requirement of
0.14% of its 2014 retail sales and had acquired its pro-rata share of poultry RECs
to satisfy the 2015 poultry waste set-aside requirement. Pursuant to the
Commission’s December 1, 2015 Order in Docket No. E-100, Sub 113, DEC’s
2015 swine waste set-aside requirement was delayed until 2016. On March
9, 2016, the Commission held a hearing on DEC’s 2015 compliance report and
REPS cost recovery rider. On August 16, 2016, the Commission issued an order
approving DEC’s proposed REPS riders. In the same Order, the Commission
approved DEC’s 2015 compliance report and retired the RECs in DEC’s 2015
compliance sub account.
Compliance Plan
On September 1, 2015, in Docket No. E-100, Sub 141, DEC filed its
2015 REPS compliance plan as part of its 2015 Integrated Resource Plan (IRP)
update report. In its plan, DEC indicates that its overall compliance strategy to
meet the REPS requirements consisted of the following key components:
(1) energy efficiency programs that will generate savings that can be counted
towards obligation requirements; (2) purchases of RECs; (3) operations of
company-owned renewable facilities; and (4) research studies to enhance its
ability to comply in future years. On February 8, 2016, the Commission held a
required public hearing on DEC’s 2015 REPS compliance plan and 2015 IRP
update report. On March 22, 2016, the Commission issued an Order Accepting
Filing of 2015 Update Reports and Approving 2015 REPS Compliance Plans
accepting DEC’s IRP update and REPS compliance plan.
On September 1, 2016, in Docket No. E-100, Sub 147, DEC filed its
2016 REPS compliance plan as part of its 2016 IRP update report. In its plan, DEC
indicates that its overall compliance strategy to meet the REPS requirements
consisted of the following key components: (1) purchases of RECs; (2) operations
of company-owned renewable facilities; (3) energy efficiency programs that will
generate savings that can be counted towards obligation requirements; and
(4) research studies to enhance its ability to comply in future years. DEC has
agreed to provide REPS compliance services for the following wholesale
customers, as allowed under G.S. 62-133.8(c)(2)(e): Rutherford Electric
Membership Corporation, Blue Ridge Electric Membership Corporation, Town of
Dallas, Town of Forest City, City of Concord, Town of Highlands, and the City of
Kings Mountain.
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DEC intends to achieve compliance with the solar set-aside requirement of
0.14% of the prior year’s retail sales in 2016 and 2017 and 0.20% of prior year’s
sales in 2018 through a combination of power purchase agreements and company
owned solar PV facilities. Based on its 2015 retail sales, DEC’s 2015 solar
set-aside requirement is approximately 85,835 RECs. Based on forecasted retail
sales DEC’s solar set-aside requirement is projected to be approximately
84,926 RECs in 2017 and 122,221 RECs in 2018.
DEC identifies three primary methods for compliance with the swine waste
set-aside requirement: (1) on-farm generation; (2) centralized digestion; and
(3) injected/directed biogas. DEC states that despite its efforts it will be unable to
comply with the requirement in 2016 and is highly uncertain of its ability to comply
in 2017 and 2018 due to multiple variables, particularly related to counterparty
achievement of projected delivery requirements and commercial operation
milestones. DEC notes that, due to its expected non-compliance in 2016, it has
submitted a motion to the Commission requesting a delay in the swine waste
set-aside compliance obligation for one year.
As for compliance with the poultry waste set-aside requirements, DEC
states in its compliance plan that it continues to pursue various efforts to meet its
compliance requirement, including, (1) direct negotiations for additional supplies
of both in-state and out-of-state resources with multiple counterparties; (2) gaining
an understanding of the technological, permitting, and operational risks associated
with various methods to produce qualifying RECs; (3) exploring leveraging current
biomass contracts by working with developers to add poultry waste to their fuel
mix; (4) exploring poultry derived directed biogas at facilities in North Carolina for
use at its combined cycle plants; and (5) utilizing its REC trader to search for out-of-
state poultry RECs available in the market. DEC further states that, in spite of
these efforts, it has been unable to secure enough RECs to comply with its share
of the 2016 aggregate poultry waste set-aside requirement (318,866 RECs) and
that its ability to achieve compliance with the requirements in 2017 (409,970 RECs)
and 2018 (409,970 RECs) remains uncertain and largely subject to counterparty
performance. DEC notes encouraging developments in its prospects for
compliance with the poultry waste set-aside requirements in a growing use of
thermal poultry RECs and DEC having recently signed a contract to purchase
poultry waste-derived directed biogas from a project in North Carolina that will be
used for fuel in DEC’s Dan River or Buck combined cycle plants. DEC notes that,
due to its expected non-compliance in 2016, it has submitted a motion to the
Commission requesting a delay in the swine waste set-aside compliance obligation
for one year.
DEC states that its general REPS requirement, net of the set-asides
discussed above, is estimated to be 3,230,850 RECs in 2016; 3,102,306 RECs in
2017; and 5,493,284 RECs in 2018. DEC notes several resource options available
to the Company to meet its general requirement. DEC states that it intends to meet
25% (the maximum allowable under the REPS) of its requirement through its
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energy efficiency programs. In addition, DEC plans to use hydroelectric power
procured from suppliers and from its wholesale customers SEPA allocations.
Finally, DEC states that it intends to meet portions of its general requirement
through a variety of biomass, wind and solar resources. DEC states that it
purchases RECs from multiple biomass facilities in the Carolinas, including landfill
gas to energy facilities and biomass fueled combined heat and power facilities.
DEC states that it recognizes that some land-based wind developers are presently
pursuing projects of significant size in North Carolina. DEC also notes that
opportunities may exist to transmit land-based wind energy resources into North
Carolina form other regions. DEC plans to meet a portion of the general
requirement with RECs from solar facilities above that portion required by the solar
set-aside. DEC states it views the downward trend in solar equipment and
installation costs as a positive trend. Approval of DEC’s 2016 Compliance Plan is
pending before the Commission.
On August 11, 2016, in Docket No. E-100, Sub 113, DEC, along with
several other parties, filed a motion to delay the requirements of the 2016 swine
waste set-aside and to modify the requirements of poultry waste set-aside. The
Commission has requested comments on the matter and it is pending before the
Commission.
Dominion North Carolina Power (Dominion)
Compliance Report
On August 19, 2015, in Docket No. E-22, Sub 525, Dominion filed an
application for approval of a 2015 REPS recovery rider and its 2015 compliance
report (for the 2014 compliance year). The report included compliance status for
the Town of Windsor. Dominion states that it met its 2014 general REPS
requirement (129,297 RECs) by purchasing unbundled out-of-state solar and wind
RECs, in-state solar RECs, and through energy efficiency measures and met the
Town of Windsor’s requirement (1,385 RECs) with additional biomass RECs from
within the State as well as the appropriate SEPA allocations. Dominion states that
it met its 2014 solar set-aside requirement (3,017 RECs) and the Town of
Windsor’s requirement (35 RECs) by purchasing solar RECs. Dominion states that
its 2014 swine waste set-aside requirement in G.S. 62-133.8(e) and (f) for itself
and the Town of Windsor was relieved pursuant to the Commission’s November
13, 2014 Order in Docket No. E-100, Sub 113. Dominion further states that it met
its 2015 poultry waste set-aside requirement in G.S. 62-133.8(f), for both itself
(5,630 RECs) and the Town of Windsor (64 RECs) and anticipates fulfillment of
the 2015 requirement for itself and the Town of Windsor. On December 16, 2015,
the Commission issued an Order Approving REPS and REPS EMF Riders and
2014 REPS Compliance. The Order approved the following total 2014 REPS
riders: $0.23 per month for residential customers; $0.99 per m